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A Turbulent Year Ahead in 2004
for China-US Trade Relations?
Special
Report - China Northeast updated on Oct 14, 2004
EDITORIAL:
"Diplomacy a must for Taiwan mission"
-
Business people must keep their eyes open
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Old Trade
Issues Page BEFORE July 8, 04
July 9 - Dec
31, 04
Jan 1 - Mar 31, 05
Apr 1 - Dec
31, 05
Hawaii Ethic Commission
- To preserve public
confidence in government by administering and enforcing State of Hawaii
governmental ethics laws to ensure the highest standards of ethical conduct
among state officials and employees. Daniel J Mollway,
Executive Director, Hawaii State Ethics Commission,
Pacific Tower, Suite 970,
1001 Bishop Street, Honolulu, Hawaii 96813, USA, Phone: (808) 587-0460, Fax:
(808) 587-0470, Email:
dmollway@hawaiiethics.org
The ICAC
(Independent Commission Against Corruption)
of Hong Kong and 13 professional
organizations/chambers of commerce have collaborated to produce the captioned
Guide. It is tailor-made for managers who are not trained IT experts but who
have to supervise their teams in the use of computers and the Internet. The
Guide offers managers practical advice on how to identify integrity risks in the
workplace and proactively reduce them by ethical management. Free copies are now
available for collection by business organizations. Contents of the Guide include:
Case illustrations from the ICAC's investigation files / An analytical
framework for addressing corruption from the legal and ethical perspectives / An
ethical management model and some practical measures / A directory of services provided by publishers, particularly the ICAC....Click here to read the Guide
All roads in
the global supply chain run through China but appearances can be deceptive.
Editorial Director Neil Shister went there to see for himself what's going on -
By Neil Shister
China Legal
Issues
China Central TV - English
Channel 24 hours live webcast
December 30, 2005
How to Cope With RMB Exchange Rate Reform
1. Enterprises
Under the current situation, export-oriented enterprises with foreign currency
assets or liabilities must lose no time in taking measures to cope with the RMB
exchange rate reform:
1) They should raise their awareness of market risks and cultivate the
sensitivity and ability of their financial personnel for coping with market
risks.
2) They should strengthen cooperation with banks and rely on the financial and
investment advisers of banks to avert and steer clear of market risks.
3) They should comprehensively consider the exchange rate risks for assets and
liabilities of individuals and enterprises.
4) They have the responsibility to improve staff welfare, treat their staff
well, establish harmonious employer-employee relationship and good corporate
culture, and foster and attract outstanding personnel. They should gradually
develop their work force from a low-cost low-quality work force into a high-cost
high-quality one.
5) They should fully take the currency and term structure of their assets and
liabilities as well as their cash flow into consideration and fully utilise
market tools to steer clear of risks and increase income with the help of
financial advisers. They must closely watch out for possible RMB exchange rate
changes and increase their risk return, and consider whether or not to make
foreign exchange settlements in the light of their development strategy.
6) They should make it clear that their first priority is to fix the cost of
risk aversion and that their second priority is to increase income.
2. Individuals
Individuals with considerable foreign currency assets should also take
appropriate measures to cope with the RMB exchange rate reform:
1) Individuals should fully take into consideration their assets, liabilities
and cash flow and balance their income and expenditure in the light of
education, travel and other needs of themselves and their families.
2) They should comprehensively consider the currency and term structure of their
assets, liabilities and cash flow as well as the nature of their movable and
immovable properties. They should watch out for possible changes in RMB exchange
rate and increase the risk returns of their assets in the midst of changes.
3) They should establish a foreign currency asset portfolio and prevent risks of
exchange rate fluctuations.
4) Individuals should make suitable foreign currency investments, such as buying
foreign currency products to increase the earning ratio of their foreign
currency assets.
5) Individuals with US dollar deposits may sell their dollars in anticipation of
RMB appreciation, but they must face the risk of RMB interest rate fluctuations.
Interest rate growth is a global economic trend.
6) They should make it clear that their primary priority is to steer clear of
exchange rate risks and their second priority is to increase income.
December 28, 2005
China to Issue First Batch of Direct
Selling Licence in March 2006
China is gradually easing control over direct selling. More than 50 enterprises
have applied for licence following the implementation of the Direct Selling
Regulations. According to the Ministry of Commerce, interested parties may now
submit their applications and should be able to receive a reply within 90 days.
Enterprises may submit their applications to the Ministry of Commerce through
the commerce supervisory bureaus in their respective provinces, autonomous
regions or municipalities. According to regulations, applicants must furnish
seven types of documentation, including proof that they meet the relevant access
thresholds, marketing plan, sample of contract they intend to sign with direct
sellers, and agreement they have reached with designated banks that they will
use the deposits in ways stipulated in these regulations.
The Ministry of Commerce will process licence applications in accordance with
stipulated procedures. According to regulations, after an enterprise has
submitted its application to the local commerce supervisory bureau where its
headquarters is located, the application form together with the relevant
documentation will be passed on to the Ministry of Commerce for examination and
approval. The Ministry of Commerce will make its decision or whether or not to
give its approval after consulting the State Administration for Industry and
Commerce. Those granted approval will be issued a direct selling licence by the
State Administration of Industry and Commerce. It is reckoned that it will not
be until March 2006 that the first batch of direct selling enterprises will be
able to do their business under licence in China.
Dongguan, Guangdong China to Lift Ban on
Cyber Cafe
Enterprises can soon apply for licences to operate cyber cafes in Dongguan. The
detailed licensing conditions have been drawn up by the Guangdong cultural
department and will be promulgated shortly.
It is understood that the cultural departments of many towns were earlier given
a consultation draft of the Measures for the Administration of Cyber Cafes in
Dongguan. The draft has subsequently been revised and submitted to the municipal
government for consideration, and applications for licences are expected to be
invited soon for the city's 400 cyber cafes. This is good news for those
interested in entering the market including Hong Kong businessmen. The measures,
though still under consultation, set stringent requirements on cyber cafe
operators. Interested Hong Kong businessmen should adjust their business
strategies accordingly.
Market access requirement 1:
The minimum registered capital of an individual cyber cafe is Rmb1 million,
while the minimum registered capital of a cyber cafe chain is Rmb10 million.
The Dongguan authorities have all along adopted a conservative approach towards
cyber cafes and imposed a total ban on the business. Hence there is now no
proper cyber cafe in the city. This strict regulatory approach has been under
criticism for years. In August this year, Dongguan mayor Liu Zhigeng talked at a
seminar with young entrepreneurs about plans to relax the restriction and issue
cyber cafe operation licences to anyone who can meet the requirements on
operation scale.
Under the new measures, two business models, individual cyber cafe and cyber
cafe chain operation, will be introduced. Cyber cafe chain includes
directly-operated stores and franchised stores. A direct store should be wholly
owned or majority owned by the chain operator, while a franchised store should
be 51% or more owned by the chain operator.
The registered capital of an individual cyber cafe should not be less than Rmb1
million. It must be manned by one qualified safety management staff, one
operation manager and more than one technical staff. There should be at least
150 but not more than 230 computer kiosks in the cafe. Each computer kiosk
should occupy an area of not less than 3 sqm, and the total area of the cyber
cafe should be between 460 sqm and 700 sqm, excluding areas for its office,
toilet, snack shop and external corridors.
As regards cyber cafe chain, the minimum registered capital is Rmb10 million.
The chain should have more than two qualified management staff, and more than
three technical staff who are well-versed in computer network development and
management, possess a university degree in computer or three or more years'
computer development and maintenance experience. An enterprise which has already
established two or more directly-operated chain stores at the time of licence
application will be granted a temporary chain operation licence at once. If it
succeeds in expanding its network to five or more stores through merger and
acquisition or franchising within one year, a formal licence will be granted.
A cyber cafe chain store has to meet the same requirement on the area of
computer kiosks as an individual store. A direct store should have at least 100
but not more than 230 computer kiosks, and occupy a total area of between 310
sqm to 700 sqm. As for a franchised store, there should be at least 150 but not
more than 230 computer kiosks, and its total area should be between 460 sqm and
700 sqm.
Market access requirement 2:
A franchise period of five years will be granted, after which the government
will recover the franchise without compensation.
Under the measures, licence applications should be made during a specified
period to the Town Cultural, Radio, Film and Television Service Centre. The
centre will then submit the qualified applications to the Municipal Cultural,
Radio, Film and Television Bureau for examination and review. Lots will be drawn
openly to determine the successful applicants.
Successful applicants will be issued the Notification on Cyber cafe Operation
Indicators and asked to sign the Contract for the Operation Right of Cyber Cafe
in Dongguan with the Municipal State-owned Assets Supervision and Administration
Commission. Operators can then proceed instantly with the establishment of the
cyber cafe. To prevent speculation of the operation licence, the legal person of
a cyber cafe operator cannot be changed within two years.
According to the measures, the franchise period is five years, beginning from
the contract signing day. At the end of the franchise period, the municipal
government will recover the franchise without compensation. An annual licence
fee will be levied and have to be paid in the first quarter of a year. Those who
fail to pay within the specified period will be subject to a daily penalty of
0.3% of the licence fee starting from the overdue date. If the licence fee
(including the penalties) is overdue for three months, it will be deemed as a
breach of contract and the franchise (including the Internet Culture Operation
Licence and the Contract for the Operation Right of Cyber Cafe in Dongguan) will
be recovered from the operator without compensation by the issuing authority.
Market access requirement 3:
Cyber cafes must be housed on the first to third floors of a building, and must
not be located in the vicinity of primary and secondary schools.
Cyber cafes will not be allowed within a distance of 200 metres from primary and
secondary schools or within a residential district. They (including both
individual and chain stores) should be spaced out at least 300 metres from each
other when they are located on the same street and at least 150 metres in radius
if they are located on different streets. Besides, they must be housed on the
first to third floors of a building, facing a street at least 6 metres wide.
Under the measures, cyber cafes must have an operation licence and deal only
with Internet service providers who have signed the Agreement on Internet
Connection for Cyber cafes with the Municipal Cultural, Radio, Film and
Television Bureau. Computers in cyber cafes must be connected to the Internet
through LANs and not through any direct means, and non-online or illegal online
games are forbidden. Cyber cafes must install and use monitoring and management
computer software endorsed by the Ministry of Culture. Their operation hours
will be restricted to 8 am to 12 midnight. Besides, cyber cafes will be required
to check and record customers' identity and keep their web surfing records. Such
records should be retained for at least 60 days and must not be altered or
deleted within this period.
China's employees in accommodation,
catering industry total 13.85 million
China's employees in the accommodation and catering industry totaled 13.85
million by the end of 2004, the country's first national economic census has
found. Among the total, 4.29 million people work in 93,000 corporate bodies in
the accommodation and catering industry, according to the economic survey
bulletin released by the National Bureau of Statistics (NBS).
Another 505,000 people work for 178,000 private runners in the accommodation
industry, and the remaining 9.05 million work for 2.76 million private runners
in the catering industry, said the survey. The survey showed that among all
corporate bodies in the accommodation and catering industry, 14.7 percent are
state-owned, 18.3 percent collective entities, 50.5 percent private ones, 1.6
percent Hong Kong, Macau and Taiwan-funded entities and 2.1 percent
foreign-invested entities.
Among all employees in the accommodation and catering industry, 20.5 percent are
state-owned, 9.9 percent collective, 38.1 percent private, 5.5 percent Hong
Kong, Macao and Taiwan-funded entities and 7.4 percent foreign-invested
entities.
In 2004, the staple service income of corporate bodies in the accommodation and
catering industry reached 164.96 billion yuan (20.6 billion US dollars), and the
business income of private runners in the accommodation industry and catering
industry totaled 24.34 billion yuan and 534.44 billion yuan, respectively.
The result of the survey was jointly published by the Leading Group of the First
National Economic Census of the State Council and the NBS. The first-ever
national economic survey, which formally began on Dec. 31, 2004, was designed to
draw an economic panorama of the country's fast-expanding secondary and tertiary
industries and complete a database covering all economic sectors.
The survey was also expected to help policy-makers and experts have a better
understanding of the overall situation of the two sectors so as to help
policy-makers draft the country's economic and social development program during
2006-2010 and formulate macro-regulation policies and industrial readjustment
and restructuring.
China's catering industry to create 880 billion yuan (US$110 Billion) revenue in
2005. Some 4 million catering businesses are in service now and are expected to
report a total revenue of 880 billion yuan this year. The People's Daily learned
in Beijing from the 42nd Annual Congress of the International Hotel & Restaurant
Association (IH&RA) that internationally known top brands in the hotel and
catering have all made presence in China.
About 500 representatives from the industry from across the world attend the
meeting which is held by the international non-profit membership trade
organization representing 300, 000 hotels and 8 million restaurants and is
officially recognized by the United Nations.
December 24, 2005
Economic rise no threat to anyone, Beijing
insists
China yesterday tried to allay fears it was a threat to its neighbors or the US
by repeating in a State Council white paper it would remain peaceful. The paper
was released by the State Council Information Office against a backdrop of
mounting pressure from the US and Japan over the mainland's enormous economy and
rising military power, and two days after the mainland revised last year's GDP
figures upwards by 16.8 per cent.
The document, "White Paper of China's Peaceful Development Road", did not
mention military development but went to lengths to argue that China's rapid
economic rise benefited the world, especially its neighbours.
Beijing started a propaganda campaign for its "peaceful emergence" in late 2003,
but changed the phrase to "peaceful development" after criticism the slogan
could be seen as provocative.
"China's development will never pose a threat to anyone," the white paper said.
"Instead, it can bring more development opportunities and bigger markets for the
rest of the world.
"Facts prove that China's economic development is becoming an important impetus
for economic growth in the Asia-Pacific region and even the world as a whole. It
has become China's national determination to safeguard world peace and promote
common development."
In terms of trade, the paper said China's huge imports had created about 10
million jobs for its trading partners, and forecast imports would reach US$1
trillion by 2010. The paper did not mention the rising tensions caused by its
enormous trade surplus, which China estimates will reach US$100 billion this
year.
It also did not directly address calls to raise the value of the yuan, but
sought to assure trading partners it would consider the rate's effect on them
before the next adjustment. "Based on its reform and development, China is
serious in judging the effects its exchange rate reform may have on surrounding
countries and regions, and the global economy and finance.
"It has thus advanced the reform in a steady way, adopted a managed floating
exchange rate regime based on market supply and demand, and linked and adjusted
it according to a basket of currencies, so that the renminbi exchange rate will
remain stable at a reasonable and balanced level."
The paper reiterated Beijing's pledge to avoid becoming a major competitor for
energy resources, despite its huge appetite for fuel. Instead, it would meet
demands through better efficiency and developing domestic supplies. "Since the
1990s, China has obtained 90 per cent or more of its energy from domestic
sources. The potential of its domestic energy supply is still great."
It also said China would not become expansionist, because it was a victim of
other countries' aggression for nearly a century.
It was also too busy with its own domestic problems.
"By the end of 2004, 26.1 million rural Chinese still lived under the poverty
line, more than 100 million farmers have to be provided with jobs elsewhere, and
the government is obliged to create jobs for nearly 24 million urban and rural
residents every year," it said.
December 21, 2005
YRD Customs Clearance Reform Kicks Off in
Zhejiang
The YRD customs clearance reform has recently made a substantive step forward
with the switch to single declaration, single inspection and single release for
Zhejiang enterprises requiring inter-customs territory clearance within the YRD.
This represents the first phase of the YRD customs clearance reform which
involves regulating and simplifying customs transit control at pilot points.
Basically, export cargoes in transit can now be declared at the local customs
office but inspected and released at the exit customs office against customs
declaration form stamped by the local customs and other necessary documents.
The new method enhances customs clearance efficiency and reduces customs
clearance costs for Zhejiang enterprises. On 6 December, Huahong Optoelectronic
Group Co Ltd became the first company to benefit from the YRD customs clearance
reform programme when its goods worth US$32,000 were inspected and released at
the Wusong customs after they were declared at the Hangzhou customs. The whole
process only took three hours.
The practice of making declaration to the local customs and going through
inspection and release in a different customs territory not only helps reduce
documentation but saves enterprises the trouble of travelling back and forth
between two customs offices. Even if problems occur, they can be dealt with at
one end, thus saving both time and energy.
No Thresholds for Comprehensive Insurance for SMEs
The China Export Credit Insurance Co (CECIC) started providing comprehensive
insurance for SMEs since the end of November. The new product is designed in
accordance with the government's relevant policies to meet the needs of SMEs
with annual export volumes under US$2 million, especially small enterprises that
have just entered the international market.
The new service offers SMEs complete protection for forex payment collection and
covers buyer's arrears of payment or refusal to pay, as well as other risks such
as forex control, trade embargo, restriction or cancellation of import licence,
and outbreak of war in the buyer country or region that render the normal
execution of contracts impossible.
Compared with traditional CECIC products, the new service targeting SMEs has
three major characteristics. It does away with insurance threshold by offering
insurance protection to SMEs with annual export volumes under US$2 million. It
simplifies insurance procedures for the convenience of SMEs and makes it
possible to fully utilise "intermediary platforms" including insurance agents
and enterprise associations in arranging collective insurance. It also has
financing functions and can mitigate the funding shortage of SMEs.
In terms of underwriting, new forms are introduced by CECIC through
"intermediary platforms" and "agents" for the first time. For claims settlement,
methods that make it easier for SMEs to make claims are adopted. These new
products were launched in Zhejiang, Jiangsu, Fujian, Shandong, Shanghai and
other places in November 2005 for a trial period of two years.
December 8, 2005
First Allocation of Quantity of Textile
Exports to US in 2006
The Ministry of Commerce (MOFCOM) has just issued a circular to the local
departments of commerce announcing the first allocation of quantity for the
export of textiles to the US in 2006.
According to the circular, the quantity of textiles exports allocated in 2006 to
enterprises meeting specific export requirements account for 70% of the agreed
quantity of exports for the year 2006, and the total amount available for the
current allocation will be 50% of this quantity. The circular calls on the
commerce departments to notify local business operators as soon as possible to
submit their applications together with their application letters and electronic
data to MOFCOM before 10 December. MOFCOM will then formally announce the
allocation plan.
For details in Chinese regarding the first allocation of quantity of textile
exports to the US in 2006 allowed for application, please visit the website of
MOFCOM at:
http://wms.mofcom.gov.cn/aarticle/ztxx/ac/al/200512/20051200935348.html
November 30, 2005
First Bidding for 2006
Textile Quotas for Export to the US
The Textile Quota Bidding Committee of the Ministry of Commerce (MOFCOM) issued
a Notice on the First Bidding for 2006 Textile Quotas for Export to the US on 25
November 2005. The total amount available for bidding in 2006 will be 30% of the
agreed export volume. The first bidding will cover 60% of this total.
The first bidding will take place between 08:00 on 6 December and 24:00 on 8
December 2005. Closing time for submitting bids is 24:00 on 8 December and the
time for opening the bids is 10:00 on 9 December.
The bidding will be conducted electronically at
www.ec.com.cn and no written applications are accepted. Please refer to
MOFCOM's notice for arrangements regarding online bidding.
Any enterprise meeting the qualifications for conducting export under the
Implementing Rules for the Bidding of Textile Export Quotas, registered with the
industrial and commercial administration departments, and with global export
performance in relevant categories between January and September 2005, is
eligible for submitting bids.
For details of the bidding process and the list of enterprises passing the
preliminary examination, please visit MOFCOM's website in Chinese at:
http://wms.mofcom.gov.cn/aarticle/ztxx/ac/al/200511/20051100879885.html
For details of the Implementing Rules for the Bidding of Textile Export Quotas,
please visit MOFCOM's website in Chinese at:
http://wms.mofcom.gov.cn/aarticle/ztxx/ac/al/200509/20050900413739.html
November 24, 2005
China Invests Rmb1,500 Billion to Develop
Renewable Energies
According to the Medium and Long-Term Plan for the Development of Renewable
Energies drafted by the National Development and Reform Commission, renewable
energies will account for over 30% of the total installed capacity of China's
power generation by 2020. Of this, hydropower generation will reach 290 million
kw, with exploitation rate at around 70%; wind power generation will reach 30
million kw; while solar energy generation will reach 2 million kw. This is
achievable by raising the proportion of renewable energy in power supply from 7%
to 15%. China needs to invest Rmb1,500 billion over the next 15 years to attain
this goal.
Renewable sources of energy, including solar energy, wind power, hydropower,
biomass energy, geothermal energy and ocean energy, are natural resources that
are renewable and sustainable. The development of renewable energies can reduce
people's over-dependence on coal, petroleum and other fossil energy and mitigate
pressure on the environment. China will accelerate the development and promote
the use of renewable energies, turning them into competitive and commercially
viable energy sources.
China is the world's leader in the use of solar water heaters. It is planned
that the total heat collection area of all solar water heaters in the country
will reach 300 million sqm by 2020, replacing fossil energy equivalent to 40
million tones of standard coal annually. Efforts will also be made to continue
to promote the use of methane in the rural areas. By 2020, the use of methane
will reach 24 billion cubic metres a year. Meanwhile, biomass liquid fuel will
also be developed actively using plants as the principal raw material. This is
expected to replace 10 million tonnes of petroleum a year by 2020.
The use of renewable energies is growing at an annual rate of 25% in China.
According to the latest statistics, China's hydropower installed capacity has
reached 108 million kw, a quarter of the national total. The heat collection
area of solar water heaters has reached 65 million sqm. Annual use of methane
has reached 5 billion cubic metres, basically improving everyday energy supply
for 14 million farmers. Photovoltaic power generation has reached 650,000 kw,
providing electricity for 3 million people living in over 700 remote counties
and towns.
New SAFE Measures to Better Manage Foreign Debts
The State Administration of Foreign Exchange (SAFE) has recently issued a Notice
on Improving the Management of Foreign Debts, which will take effect on 1
December 2005.
The main points of the notice are: 1) delayed import payments of an amount
equivalent to or exceeding US$200,000 with an agreed payment period of 180 days
or more will be subject to foreign debt registration management and quota
control; 2) management of the foreign debts of the following types of
foreign-invested enterprises (FIEs) will be standardized: FIEs with less than
25% foreign equity ratio, FIEs with a foreign investment amount equal to their
registered capital or an unclear foreign investment amount, foreign-controlled
investment companies, foreign-invested leasing companies and other special
categories of FIEs; 3) funds absorbed by China-incorporated multinational
companies from offshore associated companies for centralized use will be subject
to foreign debt management; 4) adjustments are made to regulations governing the
management of offshore guarantees of domestic loans. The notice also calls on
banks to cautiously handle the capital fund and foreign debt settlement of FIEs.
The notice puts China's foreign debt management regulations into practice by
placing delayed import payments exceeding a certain time limit and amount under
foreign debt management. In standardizing foreign debt management, the need to
facilitate banks and enterprises in their normal operations has been fully taken
into consideration and handling procedures have been simplified. In addition,
the consistency of the policy is maintained by referring to the management
principles of the departments concerned and aligning with relevant rules and
regulations.
There has been a sharp rise in foreign debts, particularly short-term debts, in
China in recent years. Increases in the foreign borrowings and trade credit of
FIEs in the mainland are major factors affecting China's foreign debt position.
The notice is issued to guide companies in the mainland to utilize foreign
capital in a rational and orderly manner, curb the excessive growth of
short-term foreign debts and further standardize foreign debt management.
November 18, 2005
California Governor
Arnold Schwarzenegger came to Hong Kong at the end of a six-day trade mission to
the mainland and praised the SAR for joining the fight against intellectual
piracy.
At a luncheon
co-hosted by the Hong Kong and American Chambers of Commerce, Schwarzenegger,
joined by Jackie Chan, Friday launched a TV campaign to promote intellectual
property rights. The two action heroes are co-starring in a TV advertisement
which is a public service announcement initiated by Hong Kong's Intellectual
Property Department with the cooperation of the California Commission for Jobs
and Economic Growth.
"The fact that Hong Kong is willing to put this PSA on TV shows Hong Kong is
serious about fighting piracy," Schwarzenegger said.
Both Hong Kong and California are powerhouses of film and music industry
production, said Stephen Selby, Hong Kong's director of intellectual property.
He said they are natural allies. "The job opportunities that flourish around the
creative industries both here and in California will wither away unless we make
an extra effort to protect copyright," he said.
Chan said piracy is killing the local film industry, which once produced up to
500 films a year but in the first six months of 2005 made less than 40. "Sooner
or later, the Hong Kong film industry will be gone," he said.
The 30-second spot shows the two actors clad in black and hit local TV screens
Friday evening. "If this were a movie, we could take on the bad guys ourselves,"
Chan says as they ride motorcycles side-by-side and dodge exploding cars. He and
Schwarzenegger ask the public to help stop piracy.
It is expected to be seen by millions of viewers in Hong Kong, Macau and Taiwan.
Schwarzenegger said there has been discussion about broadcasting in other parts
of China.
Selby said Schwarzenegger and Chan worked for free and his department put
US$60,000 (HK$468,000) towards the commercial's production and another
HK$330,000 toward post- production costs. The department spends HK$7 million
annually on public education, he said.
On November 7, a Hong Kong man was the first person in the world jailed for
uploading copyrighted movies to the Internet. Chan Nai-ming was sentenced to
three months in prison for using BitTorrent, a peer-to-peer filesharing program,
to upload films onto the Web. "If we don't use him as an example, then more
people will do it," Chan said but admitted he felt for the man.
Later, however, Chan called for more stringent measures. "Sometimes human rights
are good," he said. "Sometimes they are not good. We need a strong government."
Schwarzenegger estimated that the United States is losing US$250 billion
(HK$1.95 billion) a year due to piracy.
Earlier Friday, the European Commissioner for Taxation and Customs Laszlo Kovacs
said piracy not only threatens the entertainment industry but can put people in
direct danger. "There are fake pharmaceuticals, fake foodstuff, fake children's
toys. It is not a joke," Kovacs said, adding fighting such piracy is even more
important than protecting intellectual property rights because fake food and
drugs directly threaten people's health.
Fake pills are hard to identify, he said, adding he hopes China and Hong Kong
will cooperate with the European Union and run a pilot project on the security
of the consumer supply chain.
Sixty percent of counterfeit articles seized in 2003 in the EU came from the
mainland, he said. Kovacs added that he thinks the majority of fake goods from
China came through Hong Kong, but he could not provide a percentage.
In response, a Customs and Excise Department spokesman insisted Hong Kong takes
stringent enforcement actions at all control points to combat counterfeiting
activities.
November 11, 2005
Don't blame trade for US
job losses - A new look at US trade and employment data shows why it’s wrong to
believe that foreign competition accounts for weak job growth since 2000.
Martin Neil Baily and Robert Z. Lawrence of McKinsey
The US recession officially ended in late 2001, and ever since, despite recent
gains, aggregate job creation has been extremely weak—weaker even than during
the "jobless recovery" that followed the 1990–91 recession. Contributing most to
the overall number of US jobs lost since 2000 has been the manufacturing sector,
which shed 2.85 million of them from 2000 to 2003, notwithstanding the
relatively mild nature of the recent downturn in the economy as a whole.
Many people in the United States have looked at the enormous US trade deficit
and concluded that a flood of imported goods from China and the offshoring of
services to India are to blame for the loss of US jobs. CNN's Lou Dobbs has
called the problem "a clear call to our business and political leaders that our
trade policies simply are not working."1 The issue isn't the concern solely of
US policy makers: the same fears about trade are rampant throughout Europe and
Japan, while protectionist sentiment is rising around the world.
But trade, particularly rising imports of goods and services, didn't destroy the
vast majority of the jobs lost in the United States since 2000. We analyzed
detailed trade and industry data to estimate the extent of job dislocation due
to offshoring in the manufacturing and service sectors from 2000 to 2003. This
work was the first complete analysis of how the economic downturn, imports,
exports, and global competition interact—directly and indirectly—to affect
employment.2
Our research shows that, in fact, only about 314,000 jobs (11 percent of the
manufacturing jobs lost) were lost as a result of trade and that falling
exports, not rising imports, were responsible. Service sector offshoring
destroyed even fewer jobs. These figures are tiny relative to the millions of
positions lost and created every year in the United States by normal market
forces.
The real causes of job losses were weak domestic demand, rapid productivity
growth, and the dollar's strength, which dampened US exports. It is vital that
policy makers understand the forces at work, for otherwise there will be a
temptation to apply quick fixes, such as protectionism, that won't restore
employment, because they do not address the underlying problems. The real
solutions—stimulating domestic demand, cutting the budget deficit, and pushing
countries with artificially cheap currencies to let them appreciate against the
dollar—are harder to implement but more likely to boost employment.
The decline of manufacturing jobs - Manufacturing's share of total US employment
has been falling for at least half a century—a trend that is typical not only of
developed economies but also of many developing ones. In the 1990s,
manufacturing employment was fairly stable. From 2000 to 2003, however, payroll
employment in manufacturing fell by 16.2 percent, the largest decline since the
end of World War II3 and steeper than the declines experienced by other sectors.
While the job losses were concentrated among producers of capital goods and
apparel, every major manufacturing sector saw payrolls fall. The bursting of the
high-tech bubble resulted in the loss of half a million jobs in computer and
electronics production. Other large declines occurred in machinery, fabricated
metal products, and textiles.
For many observers, trade was the obvious culprit. Since 1992 the United States
has run an increasingly large trade deficit, which reached $403 billion in 2003.
The size of this deficit and its pervasiveness across economic sectors make it
tempting to believe that trade played a major role in the manufacturing
recession. What these observers have missed is the subtle relationship among
productivity growth, domestic demand, exports, and imports. It is this interplay
that leads us to the counterintuitive conclusion that the influence of trade has
been minor.
The role of trade - During the late 1990s, trade wasn't a significant cause of
job losses, because the United States enjoyed full employment. A shortage of
labor, not unemployment, was the problem of the day. The trade deficit in part
reflected the fact that the country was producing less than it was consuming.
After 2000, as the economy fell into recession, US exports fell. We estimate
that more than 3.4 million manufacturing workers were producing goods for export
in 2000; by 2003, this number had fallen below 2.7 million. All told, the export
slump destroyed 742,000 US manufacturing jobs.
On the import side, though, the picture was very different. It isn't true that
manufactured goods flooded into the United States after 2000. In fact, growth in
manufactured imports was quite sluggish from 2000 to 2003. And as we will
explain, this weakness in imports actually boosted manufacturing employment in
2003 by some 428,000 jobs.
Overall, then, trade accounted for a net loss of no more than 314,000 jobs (a
reduction of 742,000 because of weak exports and an increase of 428,000 owing to
weak imports), representing only 11 percent of the total manufacturing job loss
of 2.85 million. The other 2.54 million jobs disappeared because of the
economy's cyclical downturn, which dampened domestic demand for manufactured
goods.
The effect of productivity growth - How did imports boost US employment from
2000 to 2003? The answer lies in the rapid growth of productivity in the United
States. To understand how this dynamic played out, we will first explore the
more intuitive link between productivity and the jobs generated by domestic
demand and by exports and then turn to the relationship between productivity and
imports. Some economic mechanisms can allow productivity increases to boost
output and employment—for example, by making companies and industries more
competitive. But from a purely arithmetical standpoint, if productivity (output
per employee) is rising, output must increase at least as fast to keep
employment from falling. After 2000, domestic US demand grew much less than
productivity, so companies needed fewer workers to fill their domestic orders.
It was a similar story with exports. They fell sharply in 2001, declined again
in 2002, and rose only slightly in 2003. With rising productivity and reduced
orders, exporters could meet demand using far fewer employees.
From 2000 to 2003, the number of jobs displaced by imports to the United States
actually declined - In the case of imports, the impact of productivity is
actually reversed because imports displace US jobs rather than create them. The
higher the productivity of US industries that compete with imports, the smaller
the number of jobs displaced by a given volume of imports. We estimated the
number by figuring out how many US workers would have been employed had the same
products been made in the United States. When we examined statistics on the
productivity of industries that compete with imports, we found that it increased
so rapidly from 2000 to 2003 that the number of jobs displaced by imports
actually declined.4
Although it might seem surprising that net trade played only a small role in the
loss of manufacturing jobs after 2000, it actually isn't. Economists often say
that international trade acts as an automatic stabilizer in an economy. During a
downturn, consumption and investment fall, which mostly affects domestic
production and employment; imports, however, are dampened too, and this softens
the impact on the domestic economy. International trade might actually have had
a positive effect on US employment over this period if not for the fact that US
exports were so weak.
Why did exports fall? - Trade's small role in the loss of manufacturing jobs
from 2000 to 2003 is a powerful rebuttal to critics of free trade, but that is
not the end of our inquiry. Knowing why exports fell is important, since this
was the reason for all the job losses associated with trade—albeit only 28
percent of the total decline in manufacturing employment.
Dogs that don't bark - The global growth recession after 2000 and the outright
recession in leading markets such as Continental Europe would appear to be the
obvious candidates to explain declining US exports. If a slowdown in the global
economy were matched by a slowdown in global trade, US exports would weaken even
if the United States maintained its share of that trade. To test this
hypothesis, consider what actually happened.
According to UN commodity trade data, US exports fell by $46.2 billion, or about
7.2 percent, from 2000 to 2003. Meanwhile, non-US world trade in merchandise
grew by 23.5 percent. If the ratio between US and non-US trade had remained
constant, US exports too would have risen by the same amount. But they didn't,
and the question is, why not?
One possible explanation is that US exports might have been concentrated in
commodities for which demand was growing relatively slowly. US exports of
high-tech goods rose rapidly in the 1990s, for example, but then dropped sharply
when the technology sector slumped. Our research shows, however, that this
"commodity" effect was quite small—in fact, it helped the United States
slightly, boosting its exports by 0.6 percent (about $4 billion). Yes, the
United States sells products (such as high-tech gear) that didn't keep pace with
the overall rise in world trade. But it also sells goods, such as aircraft
(including military aircraft and helicopters), auto parts, automobiles, and
medical products, in which world trade grew rapidly. Overall, this commodity
effect was nearly a wash.
Another possibility is that demand was weak in countries to which the United
States exports—perhaps it was competing in the "wrong" markets. It is indeed
true that demand in important US export markets, such as Brazil, Canada, and
Europe, was soft. Yet trade with China and Mexico was positive for US exporters.
On balance, US export markets grew somewhat more slowly than did total world
trade, so this "country" effect does explain a little of the weakness of US
exports, but only a little.
Competitiveness and the dollar - Or perhaps US companies simply became less
competitive compared with producers in other countries. Loss of competitiveness
is a vague term that can reflect a number of factors, including the entry of new
competitors such as China and India, an improvement in the quality of foreign
goods, or a change in the sourcing patterns of US multinationals away from US
goods. Such structural factors, though, have been at work for some time. They
therefore seem unlikely to be the main reasons for the rather abrupt shift from
rapid export growth in the 1990s to falling exports in 2001 and 2002.
Much the most important reason US exports became less competitive was the high
value of the dollar, which rose from the late 1990s through early 2002, boosted
by private capital inflows in the 1990s. Even though the US economy later
weakened, these inflows continued after 2000, since foreign investors still
hoped to find higher returns in the United States than elsewhere. As time went
on, the dollar was propped up more by capital inflows from foreign governments
purchasing US Treasuries and other dollar assets. (Prime examples of this trend
were Asian countries with currencies pegged to the dollar and countries that
bought dollars in an attempt to limit the appreciation of their own currencies
as the dollar started to weaken in 2002.) The dollar has now fallen sharply
against the euro, but the damage has been done. Experience shows that there is a
long lag (about three years) before changes in exchange rates have their full
effect on export volumes.
We estimate that if the dollar hadn't increased in value after 2000, exports
would have risen by $29.3 billion over the next three years rather than falling
by $50.7 billion. Productivity was growing so fast that this export growth
wouldn't have halted the loss of manufacturing jobs, but the number lost as a
result of the country's export performance would have been 447,000 instead of
the 742,000 actually recorded. After adding back the 428,000 jobs related to
changes in imports, trade's impact on manufacturing employment would have been
practically zero.
In short, the appreciation of the dollar accounts for most of the erosion in the
US share of world markets. It is by far the most compelling explanation for the
weakness of US exports and, hence, for the number of manufacturing jobs lost to
trade.
What role did offshoring play? - The development of India's
business-process-outsourcing sector, which is heavily geared toward exports to
the United States, has added a new layer of concern about US jobs, particularly
good ones. With large numbers of college-educated, English-speaking, highly
motivated workers in India, even white-collar workers in the United States feel
threatened.5 But the figures so far suggest that the number of jobs transferred
to India is tiny relative to employment in the US service sector. One powerful
indicator of this reality is the relative health of employment in computer
services during recent years, given the weakness of domestic US demand for
technology services.
A drop in the bucket - Adding software and business-process jobs together, about
274,000 jobs,6 at most, moved to India from 2000 to 2003—equivalent to an annual
average change of about 91,500 positions. Although the costs were substantial
for the displaced employees, a job shift of this size is small compared with the
2.1 million service jobs created every year during the 1990s and minor compared
even with the net annual job increase of about 327,000 from 2000 to 2003.
Employment in IT and IT-enabled occupations has actually been surprisingly
strong in the past few years. A look at employment patterns in the IT
occupations that offshoring might have affected (Exhibit 3) reveals that total
employment in computer-related service occupations dropped only modestly from
1999 to 2003.7 Moreover, the job decline after 2000 followed a huge technology
boom in the late 1990s, culminating in the surge of employment and investment
needed to resolve the Y2K problem. The employment levels reached in 2000 were
unsustainable regardless of what happened to US trade in services with India.
Winners and losers - While the overall change was small, important shifts did
take place in the mix of employment within computer occupations. The biggest
losers were computer programmers and computer support personnel. For the latter
group, employment surged from 1999 to 2000, strongly suggesting a Y2K effect;
employment in 2003 was still above the 1999 level.
For computer programmers, however, the decline of 99,090 jobs probably was the
result of offshoring to India. We estimate that as many as 134,000
software-related jobs were created in India to serve the United States—roughly
equivalent to the number of US software sector jobs lost. As trade in services
with India became cheaper and easier, the computer-programming sector followed
the laws of comparative advantage, with basic programming jobs moving to
low-wage countries. At the higherend of the spectrum, though, jobs continued to
proliferate in the United States. From 2000 to 2003, the number of US computer
software engineers and computer and network systems analysts, who work on
higher-end applications and systems, actually increased, thereby offsetting the
loss of computer-programming and computer support jobs over the same period.
How to get back on track - Our research focused on understanding the causes of
job losses rather than identifying prescriptions to improve the situation.
Nevertheless, this work holds a powerful implication for government leaders.
Since trade and offshoring weren't the primary reasons for the weak post-2000 US
employment performance, they shouldn't be the focus of policies to create or
restore jobs. In particular, imports didn't cause the job losses, so there is no
case for trade restrictions. Instead, policy makers should attack the real roots
of declining employment: weak domestic demand and a dollar-driven decline in
exports.
One task should be to stimulate domestic demand, whose weakness helped account
for 89 percent of lost manufacturing jobs. Recent expansionary fiscal and
monetary policies have been moving the economy in the right direction; now it is
a matter of letting them aid the economy's natural recovery. Once it is well
established, a sustained effort to reduce the federal budget deficit would help
to lower interest rates and reduce the overvaluation of the dollar—and would be
good economic policy in any case.
Since the strong dollar was in large part responsible for the falling level of
exports and thus for some of the loss of manufacturing jobs, US policy makers
should continue to promote exchange rate flexibility on the part of other
countries. Asian governments that have been intervening in foreign-exchange
markets to prevent their currencies from appreciating against a declining dollar
(and therefore from damaging exports to the United States) should be encouraged
to let dollar depreciation run its course. The dollar might need to decline
further against other currencies, including the euro.
Although stimulating demand and encouraging exchange rate flexibility will
address the root causes of US job losses, we recognize that these policies will
not restore every lost job or help every displaced worker. The best strategies
for dealing with the adverse effects of trade-related job dislocation are
trade-adjustment-assistance programs that give workers opportunities to improve
their skills.8 Such initiatives should have the added benefit of helping to
defuse protectionist pressures. Defusing them is critical because protectionism
isn't merely the wrong answer to US job losses; it is a response to the wrong
question.
About the Authors
Martin Baily, a senior fellow at the Institute for International Economics and
chair of the President's Council of Economic Advisers under President Clinton,
is a senior adviser to the McKinsey Global Institute; Robert Lawrence is Albert
L. Williams professor of trade and investment in the John F. Kennedy School of
Government, Harvard University, and a senior fellow at the Institute for
International Economics. This article is based on the authors' What Happened to
the Great US Job Machine? The Role of Trade and Offshoring, a Brookings Paper on
Economic Activity to be published in April 2005.
The authors wish to thank Jacob Kirkegaard and Katharina Plück, of the Institute
for International Economics, and Magali Junowicz for their assistance in the
preparation of the underlying paper.
Notes
1 Lou Dobbs, "A home advantage for US corporations," CNN, August
27, 2004.
2 For the full details of our analysis, see Martin Neil Baily and Robert Z.
Lawrence, What Happened to the Great US Job Machine? The Role of Trade and
Offshoring, a Brookings Paper on Economic Activity to be published in April
2005.
3 Prior to 2000, the largest decline, from 1979 to 1983, was to 17 million, from
19.4 million—about 12 percent.
4 US manufactured imports rose much more slowly than productivity over these
three years. Hence fewer US jobs were displaced by imports in 2003 than in 2000.
5 The literature on the impact of offshoring is extensive. See, for example,
Charles L. Schultze, Offshoring, Import Competition, and the Jobless Recovery,
Brookings Institution Policy Brief Number 136, August 2004; Lael Brainard and
Robert E. Litan, "Offshoring" Service Jobs: Bane or Boon—and What to Do?
Brookings Institution Policy Brief Number 132, April 2004; Jagdish Bhagwati,
Arvind Panagariya, and T. N. Srinivasan, The Muddles over Outsourcing,
Washington University at St. Louis Economics Working Paper, International Trade
Series, Number 0408004, August 2004; Martin N. Baily and Diana Farrell,
Exploding the Myths about Offshoring, McKinsey Global Institute, April 2004; and
Robert D. Atkinson, Meeting the Offshoring Challenge, Progressive Policy
Institute, New Economy Policy Brief, July 2004.
6 This estimate is an upper bound. Roughly 134,000 of the jobs were in software
and 140,000 in other business processes.
7 Note that this estimate doesn't include production workers in the IT hardware
industry. Manufacturing employment in the computer and semiconductor industries
fell very sharply after 2000.
8 Lori Kletzer and Robert E. Litan, "A prescription to relieve worker anxiety,"
Policy Brief 01–02, Institute for International Economics, Washington, DC,
February 2001.
November 9, 2005
New SAFE Measures to Better
Manage Foreign Debts
The State Administration of Foreign Exchange (SAFE) has recently issued a Notice
on Improving the Management of Foreign Debts, which will take effect on 1
December 2005.
The main points of the notice are: 1) delayed import payments of an amount
equivalent to or exceeding US$200,000 with an agreed payment period of 180 days
or more will be subject to foreign debt registration management and quota
control; 2) management of the foreign debts of the following types of
foreign-invested enterprises (FIEs) will be standardized: FIEs with less than
25% foreign equity ratio, FIEs with a foreign investment amount equal to their
registered capital or an unclear foreign investment amount, foreign-controlled
investment companies, foreign-invested leasing companies and other special
categories of FIEs; 3) funds absorbed by China-incorporated multinational
companies from offshore associated companies for centralized use will be subject
to foreign debt management; 4) adjustments are made to regulations governing the
management of offshore guarantees of domestic loans. The notice also calls on
banks to cautiously handle the capital fund and foreign debt settlement of FIEs.
The notice puts China's foreign debt management regulations into practice by
placing delayed import payments exceeding a certain time limit and amount under
foreign debt management. In standardizing foreign debt management, the need to
facilitate banks and enterprises in their normal operations has been fully taken
into consideration and handling procedures have been simplified. In addition,
the consistency of the policy is maintained by referring to the management
principles of the departments concerned and aligning with relevant rules and
regulations.
There has been a sharp rise in foreign debts, particularly short-term debts, in
China in recent years. Increases in the foreign borrowings and trade credit of
FIEs in the mainland are major factors affecting China's foreign debt position.
The notice is issued to guide companies in the mainland to utilize foreign
capital in a rational and orderly manner, curb the excessive growth of
short-term foreign debts and further standardize foreign debt management.
Current Competition in Pan-PRD Retail Sector and Entry
Strategy
With the lifting of geographic and quantitative restrictions on foreign
participation in China's retail sector on 11 December 2004, foreign investors
can now make a full foray into all mainland cities, including those in the Pan-PRD
region. Under the circumstances, the advantages enjoyed by Hong Kong under CEPA
have become less obvious. As more multinational giants enter the mainland retail
sector, competition is set to become even more intense. Hong Kong companies
should watch out for the future competition landscape of the Pan-PRD retail
sector and seek ways to consolidate their market position and expand to other
market segments.
Huge Market, Fierce Competition
The nine Pan-PRD provinces and regions make up one-fifth of the total land area
of China. Their combined population of 453 million accounts for one-third of the
national total and is larger than that of the EU (450 million) and three times
that of Russia (150 million). In 2003, their GDP stood at US$652.6 billion,
representing one-third of the country's total, and is higher than that of India
(US$512 billion) and close to that of Canada (US$762.1 billion).?/font>
With rapid economic growth and rising income in recent years, the nine provinces
and regions have reached a relatively well-off stage of economic development,
with total retail sales increasing steadily. Over the past few years, sales
revenue generated by the core business of retailers in the region has posted an
average annual increase of 20%. According to projections of the State
Information Center, China's total retail sales will increase steadily at an
annual rate of 8-10% between 2005 and 2010 to exceed Rmb20 trillion by 2020.
Although the absolute difference in market size between the eastern and western
regions looks set to stay in the short term, the growth momentum of the consumer
market in the central and western region will go at a similar rate as that of
the eastern region. Continued growth in consumption demand will prolong the
upward trend of the retail sector.?
At the same time, the people’s consumption mix is moving up-market. Urban
residents are increasingly shifting from purchases of basic items such as food
and clothing to a full range of goods and services including housing,
automobile, electronic information products, high-end consumer durables, and
education, tourism and cultural and entertainment services.
Despite continued growth in the consumer market, competition is set to intensify
in Pan-PRD over the next few years as foreign retailers are free to enter any
mainland city following the lifting of geographic and quantitative restrictions
in 2005. According to statistics compiled by ACNielsen, 70% of the world's top
500 multinational retail giants have entered the China market. In 27 key
mainland cities, foreign players account for over 23% of the total business
floor area of large retail facilities (i.e. those occupying 8,000 sqm or more).
Competition between domestic and foreign players is especially keen in
first-tier cities. Some of the foreign retail giants which entered the China
market early are now planning to expand to second- and third-tier cities. In
other words, they are adjusting their shop expansion strategy in China in
preparation for large-scale business expansion following the full liberalisation
of its retail market.
At present, three of the world's leading retail giants ?Wal-Mart, Carrefour and
Makro ?have established footholds in Pan-PRD. Their entry has further escalated
competition in the Pan-PRD retail market. For instance, Wal-Mart has so far
opened three outlets in Fuzhou. Between 1999 and 2004, it opened shops in
Kunming, Guiyang, Changsha, Nanchang and Nanning. It also plans to venture into
Sichuan by establishing a base in Chengdu in 2005. Carrefour currently has
outlets in Xiamen, Changsha, Chengdu and Kunming. Among these, the group's
second outlet in Kunming was opened in just 28 days from preparation to store
opening ?a record in Carrefour's history. Meanwhile, Makro has chosen Fuzhou to
locate its first China store outside of the Yangtze River. The group has
expanded into Changsha, Nanchang and Chengdu. According to reports, Makro will
open its second store in Chengdu in 2005, with a third one now in the pipeline.
Growing market competition is cutting into profit margins and forcing the less
competent players out of the market. Hong Kong companies wishing to expand in
the Pan-PRD market should critically evaluate their strengths against the
fiercely competitive backdrop, especially in fist-tier cities characterised by
cut-throat competition.
Rural Market Largely Untapped
As the rural economy and people's income continue to grow, the purchasing power
of rural residents is rising steadily. The consumer market in rural China now
promises great development potential. Currently, large retailers including
foreign players hardly have established a presence in the rural distribution
network. Individually-owned businesses and private enterprises command a 90%
share of the markets at county level and below. The single ownership structure
of retailers can no longer meet the needs of rural consumers. This augurs well
for the development potential of China’s retail sector in the rural areas.
Lower cost is an advantage in exploring the rural retail market. In large
mainland cities, rental at prime shopping districts costs almost Rmb10,000 per
sqm, hence building a distribution network there requires tens of millions of
yuan. By comparison, the rural areas are less developed than urban areas and
land cost is lower. Opening a supermarket of the same size in rural areas
probably costs less than half of that in urban areas. Besides, labour costs in
rural areas are only one-third or half of those in large and medium cities.
The central government also encourages the development of the rural consumer
market. The State Council has earlier released a set of opinions?on promoting
the development of the distribution sector. The government encourages
distribution enterprises to expand into the rural areas and improve the
distribution networks there through chain operation. The Ministry of Commerce
also plans to open 250,000 chain operated supermarkets in rural areas on a pilot
basis over the next three years, forming a network of modern rural consumption
spots covering more than half of all villages and over 70% of all townships in
China.
Opportunities in Hainan Retail Market
At present, foreign retail giants are not interested in the Hainan market due to
its relatively small size. With a population of 8.1 million, the province posted
per capita retail sales of Rmb2,367 in 2003, which was Rmb1,180 lower than the
national average and just one-fifth of that of Beijing. In terms of per capita
retail sales, Hainan ranked 19th among all mainland provinces during the same
year.
More importantly, the province's total retail sales of Rmb20 billion a year are
the lowest among the nine Pan-PRD provinces and trailed only by Qinghai and
Tibet among all 31 mainland provinces, autonomous regions and municipalities.
The annual sales of Hainan's largest retail group are about Rmb400 million.
Hence, the province is hardly attractive to multinational giants some of which
are already posting billions of yuan in annual sales in the mainland.
On the other hand, market saturation is another deterrent factor for foreign
investors. The province currently has 120,000 retail outlets, translating into a
ratio of 15 outlets per 1,000 persons. The national average is 12 outlets per
1,000 persons. The majority of the outlets are found in the city of Haikou. The
high concentration means per capita retail space in Haikou has far exceeded the
international standard. Prior to the administrative rezoning of Haikou in 2003,
the per capita commercial space was over 1.3 sqm in the city, which was much
higher than the national average. As the city's population almost doubled after
the rezoning, the per capita commercial space dropped to a more reasonable level
of 0.5 sqm. Market saturation has made operation difficult and cut into profit
margins.
Despite their large number, retail outlets in Haikou tend to be relatively small
and scattered. In particular, there are only a very small number of large
retailers and modern department stores. The city does not even have a full-size
pedestrian shopping street. Almost 10 million tourists visit Sanya via Haikou
every year. If Haikou can offer more one-stop shopping malls featuring tourist
attractions, leisure and shopping facilities, some of these tourists may stay in
Haikou instead of flying straight out of the city after visiting Sanya. From
this perspective, Hainan's retail market offers excellent development potential.
Under government plans, the province will give priority to the construction of
consumer goods market and development of new retail channels; expedite the
development of large supermarkets in Haikou and Sanya, as well as large
specialised supermarkets with emphasis on home electrical appliances, food,
building materials and houseware; and speed up the establishment of convenience
stores and community stores in the form of chain operation for the convenience
of local residents.
Entering Pan-PRD Market as Brand Agent
Hong Kong companies may not be able to compete head-on with multinational giants
in running large retail outlets. However, other options are open for entering
the Pan-PRD market. Operating branded chain stores and specialty stores is a
major strength of Hong Kong companies, many of which have accumulated years of
brand agency experience and are well versed in running chain stores in a
creative way. At present, branded chain stores operated by Hong Kong investors
make up a significant portion of the shops on Dongmen Street and Huaqiangbei in
Shenzhen. These stores are quite successful.
The branded chain store market is now at a growing stage in Pan-PRD, offering
excellent development potential. Hong Kong companies can capitalize on CEPA and
introduce world brands to this market by serving as their agents. The best bets
are quality, second-line international brands that are fashionable and
reasonably priced because they can meet the needs of the middle class in the
mainland. In particular, cities with higher per capita GDP levels tend to offer
greater growth potential for distributors and agents of mid- to high-range
international brands. Cities in PRD are ready markets at this stage. Hong Kong
companies must conduct thorough studies of their target market before making a
foray into the Pan-PRD market. They should also hire experienced local people to
help develop the mainland market.
Government Contacts Essential
Over the years, Hong Kong companies have been accustomed to the established
rules of the business world and would reckon that normal business operations
could be ensured as long as they abide by the relevant laws, rules and
regulations of the government and relevant departments. In their experience,
excessive contacts with government authorities are not necessary. Many Hong Kong
companies therefore take for granted the same applies to the mainland and tend
to shy away from making government contacts. However, as the market economy has
yet to be established in the mainland, immature systems and regulations will
inevitably create hurdles and unexpected costs for Hong Kong investors. For
example, changes in policy may undermine the interests of Hong Kong companies;
different provinces and cities may have different administrative standards that
result in higher costs for Hong Kong companies. Mainland enterprises including
private enterprises and individually-run businesses, on the other hand, are very
familiar with the local conditions and recognize the importance of maintaining
close contacts with government authorities which in return benefits their
business operations.
The tendency of Hong Kong companies to stay away from government authorities
also explains why they find it difficult to trade with government departments
and state-owned enterprises. Compared to their mainland counterparts, Hong Kong
companies are seldom awarded large government procurement orders.
November 2, 2005
David Lampton: American
"China expert"
White-haired and a man of decent language, David M. Lampton is one of the
authoritative "China experts" in the United States who has been engaged in China
studies for more than 30 years and is the author of numerous books and articles
with new theories. He has repeatedly made his own policy suggestions. As the
president of the National Committee on United States-China Relations for 10
years, he has frequently got in touch with Chinese people from all walks of life
and improved the exchanges between the two governments and that between the two
peoples, reports the overseas edition of People's Daily on November 1.
"US-China relations are focused on cooperation"
"This year marks the very important year for US-China relations. The frequent
mutual visits between the top-level officials of the two countries are the ripe
hallmark for the ties between the two countries, which plays a very active
role", said Lampton in his recent interview with the reporter in Beijing's
Palace Hotel when he paid a visit to China in late September this year.
The hot summer weather in Beijing brought no impact to many US heavyweight
officials' visits to China, and among them, there included twice shot-term
visits by US Secretary of State Condoleeza Rice and the visit by US Deputy
Secretary of State Bob Zoellick. In October, US Defense Secretary Donald
Rumsfeld paid his visit to China, which drew the world's attention.
Lampton used two words to describe the US-China relations: complicated and
cooperative.
He said that with the end of Cold War and the economic globalization, the
complicated financial relations between the two countries of the United States
and China have been established. Apart from Japan, China has the most US
treasury bonds in the world while the United States is the largest export market
for China. There are 60,000 Chinese students and visiting scholars in the United
States this year while 6,000 students from the US study in China. There are
strategically geopolitical relations between the two nations.
They wish to control the Korean Peninsular nuclear proliferation and attempt to
develop cooperation on the issue of Iranian nuclear proliferation.
The two countries are managing to make the international energy market stable.
They will cooperate in the area of health since it is easier for new viruses to
spread out in the world due to developed transportation.
"I named these as multi-layer, complicated and important cooperation", stressed
Mr. Lampton, "Certainly, in the cooperation of different layers, it is
impossible for both sides to reach mutual recognition on every point. So, there
involve many areas of cooperation and also exist many frictions in the relations
between the two countries. The United States and China should cooperate to
settle various complicated problems".
On the way to China studies
As a heavyweight China expert, there are two titles for Lampton: dean of the
Johns Hopkins School of Advanced International Studies (SAIS) and director of
China Studies, and director of Chinese Studies at The Nixon Center and research
fellow.
"I was born nine months after my father returned from France in 1946. Before
that, he took part in World War II. I have grown up in California where live
many Chinese that I am very fond of", Lampton recalled his own growing
experiences.
When in high school, he was lucky to meet a good teacher, he said, "She taught
us the Far East history and most part of which was about the history of China
and I was obsessed with it. I believed at that time it was unlucky that the
United States could not have good relations with China".
The Vietnam War broke out in 1960s. At that time, he was sharply aware of that
the United States got stuck deeply in the Vietnam War. Its main reason is the
US' ignorance of the history of Asia. When Mc Carthyism was prevailing in 1950s,
many people, who had understanding of Chinese, were driven out of the US
government or afraid of telling the truth so that the government followed a
wrong line.
"I decided to understand more of China to reduce future mistakes". Lampton was
determined to make researches on China and has finally been on the way to China
studies. When studying in Stanford University under the tutorship of famous
China expert Michel Oksenberg, he held that the United States should have
"exchanges" with China. In 1960s and ¡®70s, there offered the best research
program in Stanford University. I studied there learning Chinese history,
politics and international relations.
Upon leaving the school, the present US Secretary of State Condoleeza Rice
became the dean of the university. It is interesting that several officials in
chare of diplomatic and international affairs in the US government graduated
from the university.
Thirty years have passed and the then young and handsome young man has grown up
to become an authoritative expert on China studies. His political suggestions
have drawn attention from US decision-makers for a long time. "Training young
Americans to understand more about China" is regarded as his own responsibility
and many more American youth come to the Johns Hopkins School of SAIS),
following his suit to make researches on China.
Improving US-China friendly exchanges
During the 10 years between 1988 and 1997, he was president of the National
Committee on United States-China Relations, devoting himself to the friendly
exchanges between the two countries. Established in 1966, the National Committee
on United States-China Relations is a non-profitable institution, in which,
there are many experts engaging in long-term China studies and some of them were
even born in China. Before his secret visit to China, US Ex-Secretary of State
Henry Kissinger asked the committee for briefing about China. In 1972, the
committee invited Chinese Ping Pong Team to visit the US and carry out the
well-known Ping Pong Diplomacy.
Lampton excitedly spoke of his personal experiences in the history of
establishing US-China diplomatic relations: "Professor Michel Oksenberg, who
worked in the US National Security Council, is my good friend. One day in
November 1978, Oksenberg came to the Ohio state from Washington to watch a rugby
match. While visiting my home, he got a call from the White House. At that time,
Leonard Woodcock, US representative to China, was holding talks with Deng
Xiaoping in Beijing while Director of China's Liaison Office to the Unites
States Chai Zemin was negotiating with US Former National Security Assistant
Zhigniew Brzezinski. Oksenberg was in charge of coordinating the talks. And
Zhigniew Brzezinski made the call. I came to know later that they were
discussing how to invite Deng Xiaoping to visit the United States during the
call."
"I did not expect that my telephone played an important role in the history of
US-China relations," added Lampton humorously. "While Oksenberg was answering
the call, my family and I went outside. It was very cold that day, however, our
family had to wait outside".
Wishing to have followers on China studies
It has been 33 years since Lampton started research on China in 1972. He is the
author of many academic books and political reports. "I will learn to master how
to look upon Chinese domestic and foreign policies and consider China issues
from the perspective of China", He said. Stating China's stand in the logic "I
believe the Chinese is thinking this way" is disadvantageous to US readers to
obtain objective conclusions.
Soon after the New Year's Day of 2001, he became the author of Same Bed,
Different Dreams: Managing US-China Relations, 1989-2000. The book quotes a
great part of Chinese viewpoints in it and let Chinese state their own stand
from their own perspective. The Chinese edition of the book was published in
Hong Kong in 2002.
"I am now writing a new book on how Chinese look upon power, discussing how to
develop China's comprehensive national power and the stronger China's
significance to the world. The book is scheduled to be published in September
2006."
Lampton is still making on-the-spot surveys in Chinese mainland, Hong Kong and
Taiwan. Frequent visits to China and holding lectures enable him to have more
understanding of the development in the relations of US-China relations in the
past more than 30 years.
Lampton wishes to continue the "affair with China" in his family and gave his
grandson a Chinese name "Zhuyi". He said, "My grandson is three years old. I
wish him to grow like bamboo, being strong and flexible, which are two very good
peculiarities to behave as a man. I will bring him to China and let him become a
more excellent expert on China studies."
November 1, 2005
China makes drastic
modifications on corporate law
On Oct. 27,2005, the amendment of the Corporate Law of China was adopted in
majority by the Standing Committee of the 10th National People's Congress at its
18th session.
The existing Corporate Law of China was enacted on Dec. 29, 1993 and experienced
minor revisions in 1999 and 2004. It has played a crucial role in building
modern corporate governance and improving the socialist market economic system
for the 11 years.
However, the current situation calls for more adaptations of the law to address
issues such as the too high incorporation requirements, and loopholes in
corporate governance, the protection of legitimate interests and rights of
shareholders (especially those of small and medium shareholders), and definition
of obligations of chairmen, councilors and top executives of companies.
Business startups encouraged
The introduction of one-person company has aroused broad attention of the whole
society in the new amendment. Huang Jianchu, an official for the economic law
with the Standing Committee of the National People's Congress, explained that
the amendment is designed to encourage investment and improve the efficiency of
the economic operation to boost the social wealth accumulation. There are also
adjustments on corporate system.
Concerns were raised in the reviewing process that the time for one-person
company was not ripe, or it was difficult to monitor the assets of a one-person
company.
The revised article of the law provides that a person is allowed to incorporate
one limited company with a minimum registered capital of 100,000 yuan which is
collected at a one-off payment.
The shareholder of a one-person company is supposed to shoulder the joint
liability for the company's debts if he/she fails to prove that the company's
assets is independent from his/her private assets.
The revised law also lower the minimum registered capital of the other limited
companies to 30,000 yuan and cut the threshold of joint stock companies down to
5 million yuan from 10 million yuan.
The law makes more financing options possible and specifies the way of funding,
as well as raises the ratio of intangible assets.
Better corporate governance
The revised law perfects the corporate governance and further improves the
internal mechanism. The amendment defines a company as a corporate legal entity
which has independent corporate assets, enjoys legitimate property rights and is
liable for debts.
Shareholders' meeting is the power organ of a company and performs its duties in
line with the law which gives it a specific role in the company. The law also
states clearly the responsibility of the shareholders' meeting, the board of
directors, management, and the supervisory councils, as well as how they
function.
Either a board chairman, an executive board director or a manager can be
appointed as legal representative of a company by shareholders or shareholders'
meeting. Dividends distribution among shareholders can be included into
corporate charters for limited companies. If the corporate charter is
inconsistent with the law on these issues, the charter prevail.
Independent board directors are required for listed companies. Board directors,
supervisory councilors and senior executives have a bigger role to play than
before, which also means they are held responsible for any harm they cause to
the company.
Protecting small and mid-sized shareholders and employees
Practically, accounting books are in hands of very few shareholders who are
directly involved in business operation and it is difficult for other
shareholders to get an accurate understanding of the company. To protect the
legitimate interests and rights of small and mid-sized shareholders who do not
run the business, the revised law entitles shareholders to check books.
Shareholders can resort to the court in case the company refuses the checking
application.
Shareholders who cause any losses to the company or other shareholders as a
result of rights abuses have to pay for what they have done. In the mean time,
shareholders can seek buying stakes if they do not receive dividends for five
consecutive years.
Labor unions should be in place and function in compliance with the law. A labor
union, on behalf of employees, signs collective contracts with a company on
salaries, welfare, insurance and working safety issues. There are also
regulations on employment contracts between the employer and the employed.
October 26, 2005
Tsang stresses importance
of HK to Canadian firms expanding into China
Canadian businesses should take advantage of Hong Kong’s financial and
professional services when they invest in China, Chief Executive Donald Tsang
Yam-kuen said overnight (HK time). Mr Tsang is on a seven-day visit to North
America — his first foreign trip since becoming Chief Executive.
He was speaking overnight to the Hong Kong-Guangdong Business Forum in
Vancouver. Hong Kong and Canada enjoy a close relationship. In recent years many
Hong Kong people have emigrated to Vancouver and other parts of Canada.
The event was attended by Canada’s Federal Minister for Industry, David Emerson.
British Columbia’s Premier Gordon Campbell, Guangdong Governor Huang Huahua and
China’s Ambassador to Canada Lu Shumin were also in the audience.
Mr Tsang explained how Hong Kong, Guangdong and Canada could enjoy a
mutually-beneficial relationship.
"Hong Kong supplies capital; accounting, insurance, legal and trade services;
expertise, connections and international experience,” he said.
“Guangdong province supplies land, infrastructure, manpower, entrepreneurial
drive, ambition and spirit; Canadian companies bring their investments,
innovations and marketing skills,” he added.
The Chief Executive noted that Hong Kong and Guangdong had a potential market of
460 million people.
Mr Tsang said the SAR had a good legal system and intellectual property rights.
He cited the world’s first conviction of a man distributing copyright computer
files on the internet in a Hong Kong court as an example.
"This highlights the Hong Kong SAR’s determination to deal with intellectual
property rights infringements and to protect intellectual property rights to the
highest possible standard," he stressed.
Mr Tsang will leave Vancouver (overnight Wednesday HK time) for New York.
In New York, Mr Tsang is scheduled to meet with the Federal Reserve Bank of New
York and deliver a speech at a business lunch. He is also expected to meet
former US president Bill Clinton, before flying to Washington for a three-day
visit.
October 25, 2005
China clears individual
offshore forays - New rule allows nationals to set up overseas vehicles for
buying mainland assets and raising funds by Bei Hu
China's foreign exchange regulator yesterday issued a new rule allowing mainland
individuals to set up offshore vehicles to acquire domestic assets and raise
funds abroad.
The regulation, which comes into effect next month, is likely to set red-chip
listings back in motion after they were stalled by rules introduced in January
and April.
Mainland firms and individuals will be permitted to use assets and equities in
domestic companies as capital contributions to offshore special purpose vehicles
that are in turn employed as a platform for international fund raising,
according to a Xinhua report last night.
Those special vehicles can engage in asset purchases and equity swaps to control
mainland assets and raise capital offshore by selling shares and convertible
bonds.
"The new rule is aimed at implementing the State Council's directive to support
and guide non-state sector development," Xinhua quoted the State Administration
of Foreign Exchange (SAFE) as saying.
"[It was designed] to foster the growth of domestic high-technology companies
and venture capital industry and facilitate efforts by such firms to raise funds
in the international capital markets to sustain their operations and expansion."
For years, mainland firms have been using offshore vehicles to buy domestic
assets and raise funds while taking advantage of preferential tax treatments for
foreigners to promote investments.
Overseas incorporation also spares the so-called red chips, or "private chips",
from onerous approval procedures for stock and bond sales offshore faced by
mainland-registered firms. These activities have proliferated in a mainland
regulatory vacuum.
Concerns about thefts of state assets and illegal capital outflows and hot money
inflows through such vehicles have led the regulator to issue two circulars
restricting mainlanders from setting up and holding shares in offshore firms.
The January and April circulars have been criticised as too draconian, leading
to a 5 per cent drop in the value of China-related merger and acquisition deals
in the first half of this year to US$26.2 billion.
Yesterday's regulation was widely expected after the SAFE, bowing to market
pressure, sent out a consultation paper proposing the scrapping of the January
and April guidelines.
Under the latest rule, offshore vehicles can repatriate funds raised abroad to
finance operations in line with share offering prospectuses.
Mainland citizens must remit dividends and profits earned from the special
vehicles back to China within 180 days. They can either keep the funds in
foreign currency current accounts or sell these for yuan.
October 19, 2005
China New Food Labeling
Standards Take Effect on 1 October
The General Provisions for the Labeling of Pre-Packaged Food and the General
Provisions for the Labeling of Pre-Packaged Food for Special Dietary Use took
effect on 1 October.
Under the provisions, ordinary food must indicate the following information in
their label: name, ingredients (with quantities), net content, name and address
of manufacturer, manufacturing date, best before date, product standard code,
storage conditions, and information on irradiation or genetic modification (for
irradiated or genetically modified food).
The general provisions stipulate that "new names", "unusual names",
"transliterated names", "shop names", "local names" or "trademark names" may be
used in food labeling provided that the name specified in national or industry
standards is shown adjacent to the name so indicated. For food products whose
names are not specified in national or industry standards, the true attributes
of the food must be indicated. Common or generic names that may mislead or
confuse consumers may not be used.
Baby formulas must indicate their nutrients, calories, directions of use and
target age group in addition to ordinary labeling requirements. Imported baby
formulas must also indicate the country of origin and the name and address of
their registered agent, importer or dealer in China.
China Strengthens Administration of Certification
Consultancies and Training
The State Administration of Quality Supervision, Inspection and Quarantine
adopted the Measures for the Administration of Certification Consultancies and
Measures for the Administration of Certification Training Institutes, which will
go into force on 1 November 2005. The new measures will be applicable to Hong
Kong, Macau and Taiwan players wishing to set up certification consultancies,
certification training institutes or resident representative offices on the
mainland.
Certification consultancies will require a minimum registered capital of
Rmb100,000 and at least four registered certification consultants, including one
senior consultant. Certification training institutes will require a minimum
registered capital of Rmb200,000 and at least four full-time teachers with
professional training qualifications. They must have at least two full-time
teachers for each course and must be able to offer their own training courses on
intellectual property rights or similar courses authorised by relevant
organisations.
Those engaged in certification consultancy or training activities without
approval will be ordered to stop such activities and fined Rmb30,000. Their
names will also be made public.
China to Establish Individual Income Tax Files
Starting from 1 October 2005, China will introduce income files for each
taxpayer. Under the Measures for the Administration of Individual Income Tax
promulgated by the State Administration of Taxation (SAT), a personal income
information system will be set up. The measures also stipulate that the income
information of all taxpayers will gradually come under unified management. High
income earners will be closely monitored, and tax dodgers will be prohibited
from leaving the country.
At present, individual income tax is mostly collected through employers which
serve as the withholding agency. In the vast majority of cases, the withholding
agency only files a lump sum with the tax authorities without providing a
breakdown by individual taxpayer.
Under the new measures, instead of reporting a lump sum, the withholding agency
must provide detailed information of their individual employees such as their
basic personal particulars, amount of income, amount of withholding tax, as well
as other relevant data.
Using the identity card number of the taxpayer as reference, the tax authorities
will build a separate file for each taxpayer based on the detailed information
received from the withholding agency and the data submitted by the individual
taxpayer. The new system will enable more detailed management of individual
income in terms of data categorisation, sorting, collation, comparison and
analysis.
The measures embrace the concept of managing the total income of all taxpayers.
After building a comprehensive information system on all individual income tax
payers, the tax authorities will then identify "key" and "problem" cases to
monitor as well as certain targets to investigate whether they have made full
payment of the tax amount due. The objective of the new system is to curb tax
dodging and ensure the collection of the tax amount due through data collection
and analysis, and tax assessment. The ultimate target is to shift the management
focus from high income earners to all individual income tax payers.
The measures also provide detailed operational guidelines for managing high
income earners. High-pay professionals, individual investors, TV/movie
celebrities, singers and sports stars, as well as visiting foreigners giving
performances in the mainland are among the key targets for monitoring by tax
authorities.
Tax authorities at the local level will also identify a certain number of
individuals as key targets to carry out detailed management on an on-going
basis. The target groups include freelance workers who are high income earners,
well recognised, and have access to various income sources without a fixed
employer. Also included are individuals who have a large impact on tax
collection.
Tax authorities will monitor the income received and tax payment made by these
targets on a regular basis. Prompt action will be taken to plug management
loopholes once irregularities are found during the data mining and analysis
process. Moreover, provincial tax authorities will compile half-year and yearly
reports on the basic data of the targeted taxpayers, such as income and tax
paid, for submission to SAT before end of July of the current year and end of
January of the following year respectively.
Professor An Tifu of Renmin University’s School of Finance pointed out that the
unified tax information system and monitoring of high income earners are
effective measures by the central government to strengthen individual income tax
collection. However, he suggested four vital measures to be taken to boost tax
collection efficiency and quality.
First, the system of permanent, unique taxpayer numbers should be introduced on
a gradual basis. The taxpayer number can be the same as a person’s identity card
number and social security number which a withholding agency has to obtain
before making withholding tax payment. This system will give a full picture of a
person’s tax payment and social security status.
Second, income should be monetarized. At present, some employers pay their
employees in cash, others pay in kind or in the form of overseas travel
allowance. This makes it difficult to ascertain the actual amount and nature of
remuneration received by individuals.
Third, cash management should be strengthened and the use of credit card
popularised. Large payments must be settled by banks and not in cash. In fact,
cash transactions are often under strict control in foreign countries.
Fourth, banks and tax authorities should be linked up. If banks and tax
authorities are connected by computer networks, the bank can alert the tax
authorities whenever a large transaction takes place. This will also help combat
corruption and promote clean government.
The measures also state that tax authorities will check the tax payment made by
taxpayers in connection with their purchase of cars and property.
To access more information related to taxpayer income, tax authorities will
strengthen ties with various government departments such as public security,
procuratorate, law courts, industry and commerce administration, banks, cultural
and sports, finance, labour, property management, transport, audit and foreign
exchange control.
Through contact with pubic security departments, tax authorities can obtain
entry-exit data of individuals without domicile in the mainland and information
about their stay in the mainland. Individuals with outstanding tax payment will
be prohibited from leaving the country.
Through contact with industry and commerce administrations, tax authorities can
access the latest alterations filed by taxpayers concerning business
registration details, and shareholding and share capital of joint stock
companies.
Also through working with cultural and sports departments, tax authorities can
obtain the latest information about performances and tournaments. They can then
monitor the event organizers to see if they have duly performed their duties as
withholding agencies.
Sept 28, 2005
First Allocation of
Quantity of Textile Exports to EU in 2006
The Ministry of Commerce (MOFCOM) has just issued a circular to the local
departments of commerce announcing the first allocation of quantity for the
export of 10 categories of textiles to the EU available for application in 2006.
According to the circular, the first allocation will make up 75% of the annual
quota. The circular asks the local commerce departments to notify traders as
soon as possible to submit their applications for textile exports together with
their application letters and summaries of electronic data to MOFCOM before 20
October. MOFCOM will then formally announce the allocation plan.
For details in Chinese regarding the first allocation of quantity of textile
exports to the EU in 2006 allowed for application, please visit the website of
MOFCOM
MOFCOM has also announced the Interim Measures for the Administration of Textile
Exports to replace the measures for trial implementation issued in June. In the
calculation of the quantity allowed for application, the requirement that the
trader's export value to the EU after 1 January 2005 must not be equal to zero
is dropped.
For details in Chinese regarding the Interim Measures for the Administration of
Textile Exports, please visit the website of MOFCOM
Sept 21, 2005
First Bidding for 2006
Textile Export Quotas
The Textile Export Quota Bidding Committee of the Ministry of Commerce (MOFCOM)
issued a Notice on the First Bidding for 2006 Textile Export Quotas on 20
September 2005. The total amount available for bidding in 2006 will be 30% of
the agreed export volume, and the first bidding will cover 60% of this total.
The first bidding will take place between 08:00 on 27 September and 02:00 on 30
September 2005. Closing time for submitting bids is 02:00 on 30 September, and
the time for opening the bids is 10:00 on 30 September.
The bidding will be conducted electronically at
www.ec.com.cn and no written
applications are accepted. Please refer to MOFCOM's notice for arrangements
regarding online bidding.
Any enterprise meeting the qualifications for conducting export under the
Implementing Rules for the Bidding of Textile Export Quotas, registered with the
industrial and commercial administration departments, and with global export
performance in relevant categories between January and July 2005 (i.e. with
global export volume greater than zero according to Chinese Customs statistics),
is eligible to submit bids.
For details of the bidding process, please visit the Chinese website of MOFCOM
For details of the Implementing Rules for the Bidding of Textile Export Quotas,
please visit the Chinese website of MOFCOM
For details of the Notice on the Preliminary Examination of Qualifications for
the Open Bidding of 2006 Textile Export Quotas, please visit the Chinese website
of MOFCOM
Sept 6, 2005
The Fourth China (Changchun)
International Auto Expo
 
held at the Changchun International
Convention and Exhibition Centre closed on 14th August 2005 after 10 days, with
over 1,000 auto manufacturers and auto parts makers from 27 countries and
regions showing their products. The exhibition covered an area of 120,000 sqm.
A total of 650 vehicles, representing 120 marks were on display. Of these, 90%
were the latest models. The exhibition covered all kinds of vehicles, including
concept and sports cars, sedans, jeeps, MPVs, SUVs, SRVs, CRVs, trucks, coaches,
pickup trucks and special-purpose vehicles. Among them were eight concept cars,
10 sports cars and four limousines with price tags of over Rmb5 million (HK$4.8
million).
Taking part in this year's expo were domestic cars priced at tens of thousands
of yuan, and Rolls Royce limousines worth millions. The major attraction this
year was the limited edition Bentley Arnage 728 with a price tag of over Rmb10
million (HK$9.6 million).
Cars priced below Rmb200,000 (HK$192,307) were very popular among working people
and many young couples clearly had the urge to buy a car at the show.
Preferential terms were offered to users who made purchases during the car show.
The offers, including reduction in road transport fees and new vehicle
inspection fees, varied from model to model. The maximum discount could amount
to thousands of yuan. A total of 3,597 cars were sold during the car show. These
included 3,339 passenger vehicles (of which 2,460 were economy models), or 1,397
more than last year, up 63.5%. Among these, 96% were made in China.
Total transactions amounted to Rmb487 million (HK$468 million), Rmb3.2 million
(HK$3.07 million) more than last year. Sales of auto parts amounted to Rmb5.8
million (HK$5.5 million). In addition, contracts worth Rmb2.2 billion (HK$2.1
billion) were signed, Rmb336 million (HK$323 million) more than at the previous
expo. In this year's event, FAW-Volkswagen topped sales, selling 259 cars with a
total price tag of Rmb57.1 million (HK$54.9 million), followed by FAW with 254
cars worth Rmb35.1 million (HK$33.7 million), Beijing Hyundai with 222 cars,
Changchun Auto Refitting Company with 220 cars, and Chang'an Auto with 163 cars.
More than one million people visited the expo. Among them, 850,000 were buyers
in the trade. This huge turnout inevitably pushed up sales considerably.
August 16, 2005
Olympic effort for
Beijing's western cuisine
 Beijing children love western fast food.
Du Lei, secretary general of the Beijing
Western Cuisine Association, is busy preparing for the Third Beijing
International Western Cuisine Cultural Festival to be held in September 2005.
According to Du, Beijing has about 1,300 western restaurants (referring to
restaurants serving non-Chinese cuisine), including formal and casual dining
places, fast food outlets, cake shops, cafés, bars and Hong Kong-style cafés.
Restaurants serving foreign cuisine in Beijing are characterised by their
"global" nature, with eateries serving Korean, Spanish, Malaysian, Italian,
Japanese, Thai, Mexican, American, French and Vietnamese food, along with
Indian, Arabian, Turkish, Russian, Swiss, Canadian, Dutch, Brazilian and German
cuisines. The list is not exhaustive.
However, even this seemingly varied selection of foods is still relatively
inadequate in number and small in scale to meet Olympic and future market
developments.
 Beijing boasts cuisines from over 20
countries.
As Du Lei notes, western restaurants in
Beijing are trailing behind coastal cities in number. There are 3,000 western
restaurants in Guangzhou and 1,600 in Shanghai, while Beijing's existing 1,300
western restaurants are disproportionate to its restaurant-going community.
Lu Shengdi, deputy general manager of TGI Friday's Restaurants Co Ltd (which
opened its first restaurant in Beijing 10 years ago) says Beijing's western
restaurant sector has yet to reach maturity.
This contrasts with the wide variety of Chinese food available. Specialised
local cuisines from different parts of China can be found in Beijing, and the
city's residents take pride in their national food culture.
To be sure, Beijingers are more traditional in their food preferences and have a
special fondness for specific Beijing, Northeastern, Shandong and Sichuan
cuisines. The price factor is another reason why ordinary people in Beijing do
not quite accept western cuisine.
 TGI Friday's restaurant is informal.
According to Yang Guohua, TGI Friday's
marketing manager, the restaurant is a casual dining place, not a fast food
venue or formal dining restaurant. Set up with an investment of US$5 million, it
has all its decorations, ingredients and even seasoning imported from the US and
offers American style service.
Per-capita spending at TGI Friday is Rmb80 (HK$76.9), which comes within the
lower price range of western restaurants in Beijing. It costs about Rmb400
(HK$384.6) per person to have a proper French meal at Beijing Maxim's, which is
not affordable to most Beijing people.
Du Lei admits: "prices at western restaurants double those of comparable Chinese
restaurants".
Returning overseas students eat western, increase demand
The industry is still optimistic about future prospects for western cuisine in
Beijing and even in the country as a whole.
According to a survey by the Western Cuisine |
