FDI ‘Slowdown’ in February is Comical

According to an article in the Shanghai Daily today, Foreign Direct Investment into China slowed drastically to a year on year rise of…38.3%! [1] You know times are good when slowing down to 38% growth represents a drastic reduction. Of course, when your main barometer shows inflation charging ahead at 7 – 9%, then you probably need that much growth in investment just to stay ahead.

What really struck me about this article however was the following…

“New foreign-funded firms fell 38.02 percent to 1,454, as investors focused on bigger and more capital-intensive projects, said Li Maoyu, an analyst at the Changjiang Securities.” [1]

As a sign of the times, this plainly means that the central government is much more interested in encouraging larger scale projects that not only will help the macroeconomics of China, but also are more easily controlled by the central authorities. Furthermore, it is a sign of the continued changing demographics of China as urbanization continues to steamroll ahead and China’s tier-2 and tier-3 cities consolidate and attract millions of migrants.

[1] Wang Yanlin, Shanghai Daily, March 13, 2008, (c) Shanghai Daily Information Company

China Transportation – Subway or Rapid Transit?

Earlier this week, the following story about Wuhan’s subway system expansion really struck me,

“City In Central China Plans To Spend $40B On Subway System…Wuhan, capital of Hubei province, plans to spend CNY300 billion (US$40 billion) to expand its subway system, Xinhua said. It will be extended from seven to 12 lines with 309 stations by 2015. Once the expansion is finished, 66% of the city’s 8.7 million people will be able to find a subway station within 600 meters of their home, Xinhua said.” [1]

Certainly for China’s mega cities, of which Wuhan truly belongs in the mix, building a massive underground system is in order and will effectively reduce congestion in the years to come. But, what about China’s smaller cities? Does the benefit outweigh the cost for cities such as Qingdao, Dalian, and Shenyang? Are there better and cheaper alternatives for Wuxi, Changzhou, Suzhou, and Hangzhou?

Yesterday, I was given a fantastic opportunity to put that in perspective when I visited with Professor Ralph Gakenheimer of the MIT’s School of Architecture and Urban Planning. Dr. Gakenheimer specializes in urban planning and transportation planning and brought to my attention an interesting alternative to subway lines that has really caught on in Latin America, Europe, and increasingly the North America and Asia. That system is something called Rapid Bus Transit, or Rapid Transit. What happens in a system like this is that the municipality builds an extra lane exclusively for buses that will stop only at express points in a city or along a highway. To get on and off the bus, you need to have entered similar to a subway where your fare is already paid so that passengers get on and off the bus quickly. Dr. Gakenheimer says average stop times are reduced to 20 seconds and falling.

But, the real advantage to the system is the cost savings it offers a local government. Subway lines cost approximately $100 million per mile in the US (costs for China are unavailable). Rapid transit lanes, however, cost between $10 and $15 million, representing savings of between 85% and 90%. That is a tremendous savings and Professor Gakenheimer indicated that many of China’s emerging 2nd and 3rd-tier cities that are dreaming of subway systems would be better suited to start preparing to build these alternative and more cost effective systems.

March 4th Asia Society Talk Notes

I had the absolute pleasure earlier this week of listening to four China hands talk politics, law, economy, and much more at a meeting at New York’s Asia Society on Park Avenue in New York. Moderating this four-person discussion was Howard Chao, Partner and Head of Asia Practice for O’Melveny & Myers LLP. He was joined by Nicholas Lardy, Senior Fellow, Peterson Institute for International Economics, Jonathan Woetzel, Director, McKinsey & Company, and Jimmy Hexter, Director, McKinsey & Company. Woetzel and Hexter’s new book, “Operation China: From Strategy to Execution” was available after the talk for attendees. Here are some highlights from the talk:

Dr. Lardy began the talk with an overview of China’s macro-economic barometers. One of th things I found most astonishing was that China’s current account surplus is between 10 & 11% of GDP. By comparison, he noted, Japan’s greatest account surplus in the 1980s was 4% of its GDP. That means that China seriously has a lot more cash stored up than even Japan did.

He went on to say that the jump in China’s prices is not restricted to just food prices and the overall CPI, but rather the PPI, a barometer of price movements in machinery, is also up and accelerating more aggressively than the CPI.

Next, he talked about why there was so much craze for investments in stocks and real estate by showing us the following:

CPI: up 7%
Savings % offered by banks: 0.71%

So, your real savings rate is greater than negative 6%. Apparently, this is a textbook case of how you create a bubble in other asset classes. Of course, when you have 300 million people urbanizing, you are going to need huge amounts of capital investment in capital-intensive projects.

Next, Dr. Woetzel noted some interesting trends as well going forward…

Migration: From 1990 to 2007, apparently 250million urbanized, but mostly through establishing new cities and shifting boundaries. That’s not going to happen because of land restrictions in the future. Effectively since that time, there have been only 100mm migrants to the major cities. Looking forward, there will probably be another 250mm migrants headed for the cities and a total urban population of 1 billion urban.

That is going to drive macro costs of health, education, and food way up. And the greatest burden will likely be on 3rd and 4th tier cities.

Jimmy Hexter then weighed in on China business strategy by explaining that the winners in China historically were those that executed bold strokes of strategy – whether through gaining advantageous licenses, exclusivity, or other sundry tools. However, as we look forward, the winners will most likely be those that deliver excellence of execution. Specifically, companies that can migrate world’s best strategies and get their domestic operations to perform better at sourcing, procurement, manufacturing, sales, distribution, and development will win.

By his account, there is an enormous opportunity to improve performance in China, with increasing outputs by 30-50% via this shifting global best practices to result.

60%+ of exports are machinery and electronics

As far as the effect any rising world raw material prices will have on causing countries to shift to Vietnam and other Asian export economies, not likely to happen any time soon. Dr. Lardy cautioned us to remember that Veitnam’s total exports amounted to $40billion in 2007, whereas
China’s topped $1 trillion.

There was also a discussion of the transient talent pool in China. Here’s why they move from one job to another:
1) Influence – want opp to drive performance
2) Promotion
3) More money

What they really want boils down to greater inclusion and recognition. Until they get it, we’re likely to continue to see rates as high as 40% job turnover every year in China (in the US by comparison, it’s 20%)

The final major topic that was discussed was capital flows in China. What we are seeing is huge amounts of capital being raised around the world, and a good portion of it is flowing to Asia and in particular, China and India. China has become a gigantic player in trade and finance, yet locally, allocation of capital has been poor because, as a result of the negative savings rate mentioned above, a large swathe of unsophisticated investors operating under duress are forced to enter a capital market that they do not really understand.

There was a great comment made about private equity investments in China. Apparently, right now, the players there that are doing well are small China private equity companies that are doing well investing in small companies with niche regional markets. For large caps, it is difficult right now because of high valuations, struggles for control, and disagreements over management.

This was a great talk put on by the Asia Society and we will continue to update you as more relevant talks occur.

Non-Communist Officials – What a Joke

Boy this type of article really pisses me off…I simply do not understand this: “China to opt for more non-Communist officials.” [1]

The article begins by stating, “More eligible non-Communists are expected to become high-ranking officials in China following last year’s appointments of two non-Communist ministers, said a spokesman of the forthcoming annual political advisory session.  Many non-Communist personages have taken up posts at government departments and judicial bodies since China started its reform and opening up (toward the late 1970s), said Mr Wu Jianmin, spokesman for the First Session of the 11th National Committee of the Chinese People’s Political Consultative Conference (CPPCC).  Mr Wan Gang, of the China Zhi Gong Dang (Party for Public Interest), was appointed minister of science and technology last April as the first non-Communist party cabinet minister since the late 1970s.  Two months later, Mr Chen Zhu, non-party member, became minister of health. Their appointments represented major moves of the Communist Party of China (CPC) in enhancing socialist democracy and pushing forward multi-party cooperation and political consultation under the leadership of the CPC, Wu said at a press conference on the eve of the annual political advisory session.”

Sorry folks, that is what is known as propaganda and I have a real problem with it – the same type of irk I recall when reading about the labor unions in WalMart that were headed by communist party members.   Here’s what bothers me so much.  It’s the way that the central communist party believes that things are really different in this dynasty.  They’re not.  The power structure is still in tact – strong central monarchy backed by a unifying military and pervasive dissidents throughout the provinces with growing wealth.  The only difference this time around is that Beijing has to deal with the whole outside world, and not just ‘the old barbarians at the gate.’

Now we get this…two minsiters appointed from without the ranks.  Can they defy the party?  Can they provide some basis for checks and balances?  Can they survive by taking a position of dissent?  Let’s ask Zhao Ziyang how that worked out for him.  That’s like an all-star game in basketball – you know, the type of game where everybody is really on the same team, nobody’s fouling, nobody’s playing defense, and the outcome is really just nominal. That’s my microcosm for these appointments.  The message is clear:  Life is quite good in the political spheres of China these days.

[1] 3 March 2008 The Statesman The Financial Times Limited. Asia Africa Intelligence Wire. All material subject to copyright. (c) 2008 All rights reserved

China Technology Gap Narrows

Interesting article yesterday in Maeil Business about the technology gap shortening between Korea and China…

With Chinese enterprises pursuing at a frightful speed by means of an industrial spy or imitating industrially advanced nations, the technology gap between chief industrial corporations of Korea and China was found to be narrowing at a fast rate. According to the Korea Institute for Industrial Economics & Trade (KIET) on Sunday, a research conducted November last year, on 608 major companies in 10 core industries such as automobile, electronics, shipbuilding and semiconductors, evaluated the overall technology gap between Korean and Chinese manufacturing industries at 3.8 years. Technology gap between Korea and China had been evaluated at 4.7 years in 2002, 4 years in 2004 and has continued to narrow down.[1]

Now, I really have no idea how you would effectively measure this; it seems so onerous and dubious, yet at the same time it does seem to me that Cherry cars are about 4-5 years behind Hyundai cars and Haier is about the same length behind Samsung in electronics. But, I am not so sure how far you can go with this. For instance, there really are no major Korean lap top manufacturers out of Korea that we see competing on a global level on a daily bases. Moreover, when was the last time you saw a Korean telecom company try and bid for a US telecom company. Moreover, Chinese companies are on spending sprees to buy technology abroad – and they currently have much deeper pockets than their rivals in Korea. For that reason and the following additional reasons, we think this convergence will accelerate in the coming months:

1) Economies of Scale – Korea cannot possibly compete with China in numbers or foreign reserves to buy companies/technologies abroad
2) FDI – China is just crushing Europe here, let alone Korea
3) Technology transfer – astute China policy necessitates this in many investment deals
4) Reputation – now this needs some qualification. I am referring specifically to biotech and an incident in which one of Korea’s most famed scientists, Hwang Woo-suk, falsely advertised successful fabrication of human embryonic stem cells by cloning. You will not see many Americans going to Korea for stem cell surgery – but they’re flocking to China. The technology gap here in terms of revenues per unit of technology is most likely in China’s favor and if not it will be within a year or two, not four.

[1] Korea-China Technology Gap Narrows to 3.8 Years 2 March (c) 2008 Maeil Business Newspaper

The Effects of Steel Prices Rising

Rio Tinto, BHP Billiton, and Vale are major corporations and they’re going to get theirs too, there’s just no two ways about it. After Rio Tinto and BHP Billiton merge in two years, that neew mammoth $400 billion company will probably set its sites on Vale, assuming of course Vale has not ammassed its pile of smaller acquisitions to compete. We shall see.

On Tuesday, Xinhua gave a pretty nice summary of the recent iron ore price hikes, their inevitability, and their effects on steel prices in the coming year. Let’s break this article down into those three sectoins:

1) Price hikes…

“After Brazilian mining conglomerate Vale hammered out 2008 benchmark prices for iron ore fines with Japanese and Republic of Korea (ROK) steel makers last week, Baosteel Group, China’s largest steel maker, agreed on the price for fiscal 2008, accepting the Brazilian miner’s price hikes that ranged from 65 percent to 71 percent compared with 2007.”

71%!! I’m confused now because the rule of 72 is only supposed to be for compounded returns – so what happens if you get there in one year? Does 72% = 100% if it’s one year? No, of course not, but if it did that probably would require me to immediately find a finance professor.

What’s more, the article says that an almost identical hike occurred two years ago…

“Since China joined the international pricing negotiations in 2004, the price has risen every year. Price negotiations for 2004 ended with an 18.62 percent increase, followed by a 71.5 percent rise in 2005 and a 19 percent increase in 2006.”

Now we can use compounding equations, and by such numbers, it would appear that steel prices have risen 2.5x over the last four years. What is this doing on a practical level? Let me give you a quick insight into our world. Two of my clients in the last week have said that their products are now more competitive if made in the North America – one in the US and one in Mexico. I am certainly not suggesting that this will be the case for years to come, and perhaps this is because their current China suppliers are in East China (as opposed to the cheaper western and central regions), but nevertheless, I do think this is a sign that things are moderately changing across various industries.

2) Inevitably. Basically, according to the article, this hike was going to hit China whether they liked it or not, whether they negotiated hard or not, and whether they neotiated early or not – it was all numbers…

“Baosteel, the partly state-owned representative of China’s steel makers in the pricing negotiations, faced a challenge. The miners were holding out for higher prices, while other major Chinese steel producers wanted a favorable pact. Given the huge share of the market that China represents, Baosteel may have believed it had more bargaining power than it did. CISA estimated the 2008 price rise at only 20 percent.

So Baosteel waited — but others negotiated.

‘Even if Baosteel had concluded negotiations first, the price hike would not be lower,’ said Hu (Kai, a senior analyst with the Chinese Umetal.com website.)”
There was no way around this. Especially given the fact that Chinese steel makers have enjoyed fat profits over the last two years as China’s stock market has boomed.

3) Pricing effects

Well, we alluded to it above, but they make it quite clear in the article what the price increases are likely to be on steel tonnage…

“
The China Securities Journal reported on Monday that 57 domestic steel mills had raised their prices after the benchmark price was settled. And on Tuesday, the newspaper reported that Baosteel had raised steel prices for the second quarter of 2008. Its prices for major cold- and hot-rolled products will rise 800 yuan (111 U.S. dollars) per ton in the second quarter, compared with the first quarter, Tuesday’s China Securities Journal quoted an announcement by Baosteel as saying.

Considering that Baosteel has a heavier reliance on imported iron ore than other domestic competitors, a 65-percent iron ore price rise could translate into cost mark-up of 258 yuan for Baosteel, as against 116 yuan for other domestic steel makers, according to statistics from Chemease, a business information provider on Chinese chemical commodity markets.

But a price hike of up to 800 yuan would offset its cost mark-up and also provide ample profit margins, said Chemease analysts.”
So, why not just buy steel from Benxi I&S, or Ma’an I&S? It’s just not that simple for two major reasons:

1) Logistics
2) Quality

Baosteel is one of the world’s best steel plants and there are grades and qualities of steel that you need for certain applications that are available at perhaps two or three more factories in China. Secondly, the country is so large that regionalism plays a huge role in determining which steel ends up in which factory.

At the end of the day, the iron ore price hikes, in addition to oil, are the largest drivers of industrial price inflation. If we use this though as a basis for comparison, then what is the industrial subsidy equivalent for China’s large subsidies on refined oil/gasoline? I would say that this question gets answered every day by those that find the real deals in China and those that just cannot seem to be profitable in China.

Source: 26 February 2008, Xinhua’s China Economic Information Service, “Iron ore price rise could force China steel rationalization” (c) 2008 Xinhua News Agency. All Rights Reserved .

Report 4 on Four of China’s Tier-3 Cities

Changzhou is really beginning to stake its place among the major tier-3 cities in the Yangtze River Delta (YRD) such as Wuxi, Cixi, Taizhou, and several others.  In fact, at its current growth rate and projections for the future, it could conceivably rank as a tier-2 city within the next 10 years, assuming a sustained dose of foreign direct investment (FDI) and port/road infrastructure construction.  The main reasons are that much like Suzhou and Wuxi before it, Changzhou is close to Shanghai and the labor force is skilled.  Moreover, at 3.4 million, it is in a population growth spurt that could easily see the total population balloon to over five million over that same 10-year period.  This is definitely a city to watch over the mid-term.

Changzhou (Chinese: 常州; pinyin: Chángzhōu; formerly known in English as Chang-chou, Changchow) is a prefecture-level city in southern Jiangsu province, People’s Republic of China. It was also known as Yanling, Lanling, Jinling, and Wujin previously. Located on the southern bank of the Yangtze River, Changzhou borders the provincial capital of Nanjing to the west, Zhenjiang to the northwest, Wuxi to the east, and the province of Zhejiang to the south.

Located in the East China, the most prosperous Yangtze River Delta, Changzhou lies in-between the two metropolitan cities of Shanghai and Nanjing. It is about 100 miles from Shanghai and 70 miles from Nanjing. With a cultural history of over 2500 years, Changzhou is also a rising modern industrial city. It covers a total area of 180,000 acres, and 11,000 acres are urban areas. The total population in Changzhou is 3.415 million, including 840,000 urban residents.

Changzhou has a solid industrial foundation. There are over 20,000 various manufacturing companies, forming a complete industrial structure including mechanical, metallurgy, electronics, textile, garments, chemicals, pharmaceuticals, plastics, building materials and foodstuff. The six main industries in Changzhou are power industry, engineering machinery, automobile, motorcycle and their parts, power transmission equipment, electronics, new-style textile and garments. It has formed numerous brand products such as the diesel engines, loaders, power transformers, city buses, special and micro motors, DVD and indigo blue denim, etc. By now, the percentage of new and Hi-Tech enterprises accounts for 50% of the economy.

 

 Administration

The prefecture-level city of Changzhou administers 7 county-level divisions, including 5 districts and 2 county-level cities.

• Zhonglou District (钟楼区)
• Tianning District (天宁区)
• Qishuyan District (戚墅堰区)
• Xinbei District (新北区)
• Wujin District (武进区)
• Jintan City (金坛市)
• Liyang City (溧阳市)

Infrastructure and Transportation

-Located just south of Chang Jiang (Yangtze River), Changzhou is situated on the main Shanghai-Beijing rail line and is one of the main stops on the busy Shanghai-Nanjing route. Changzhou also has its own airport approximately 15km from the city centre. There are flights to Beijing, Guangzhou, Shenzhen, Shenyang, Kunming, Harbin and Dalian.

- Changzhou Airport’s seat occupation rate has remained above 65% for several years and actually hit 70.8% in September 2007, according to the latest news released by the airport. The passenger throughput experienced a year-on-year increase of 12.95% in the first nine months of 2007, and increased by nearly 100,000 person-times when compared with the volume in the whole of 2005. The passenger throughput continued to set new monthly records in July and August. Thanks to the increase in transportation capacity, Changzhou Airport’s cargo and mail throughput has experienced rapid growth. The cargo and mail throughput increased by 11.89% year-on-year in the first three quarters, and set a new monthly record in September.(China Industry Daily News, 11/6/07)

-By the end of June 2007, the downtown area of Changzhou City had 21 concrete producers and a total of 30 production bases (mixing stations) with more than 60 concrete production lines and 498 registered agitating trucks, with the annual designed concrete production capacity and the transfer pump capacity standing at 18 million cbm and 12 million cbm respectively, according to the latest information from the Secretary Office of the Changzhou Municipal Concrete Association. Based on preliminary statistics, the concrete producers in the downtown areas produced and supplied 4.6 million cbm of concrete to the market in the first half of 2007. (9/10/07, China Financials Daily News)

 

-Changzhou City plans to complete an investment of RMB1.058bn in the construction of trunk roads in 2007, and actually completed RMB705M in the first eight months, accounting for 66.6% of the annual target, according to the latest information released by the Changzhou Municipal Government of Jiangsu Province. (9/20/07 China Industrial Daily News)

-Jiangsu Province’s Changzhou City invested RMB4.948bn in transportation projects in the first three quarters of 2007, according to the latest news released by Changzhou City’s Transportation Department. Of the total, the investment in expressway construction reached RMB3.8bn, increasing by 13.4% year-on-year, and accounting for 76.8% of the total. Investment in expressways and national and provincial trunk route highways hit RMB2.137bn and RMB930M respectively, up 8.1% and 3.74% year-on-year, while the investment in rural expressways experienced a year-on-year increase of 41.79% to RMB660M.(China Industry Daily News, 10/16/07)

-Changzhou plans to invest RMB5.07 billion in traffic construction this year to build a 102 -kilometer long highway, two high-quality passenger-transportation lines, add 300 taxis to the roads and begin a number of other projects. The national highways 104 and 312 both pass by the city, and it is additionally linked to the surrounding cities in Jiangsu province as well as those in Zhejiang, Shandong and Hubei by long distance bus routes. Changzhou is situated on the main Shanghai-Beijing railway line and there is an urban rail project currently underway and due to be completed in 2015. The city also has a regional airport located 15 kilometers from the city center. Changzhou has a Category A cargo transport port located on the southern bank of the Yangtze river. There is also a passenger ferry in Changzhou, and the Beijing to Hangzhou Grand Canal which passes through the city is being expanded to include eleven 1,000MT-class berths and thirty-one 500MT-class berths as well as affiliated loading and unloading equipment.  (China News Digest, 1/14/08)

 

Human Resources

-Changzhou is an educational hub and is home to several universities (including Ho Hai University, Changzhou Campus and Jiangsu University of Science and Technology) and middle schools (including Changzhou Middle School and Changzhou International School).

-The resumption of MG car production by Nanjing Automobile Corporation has helped to cement the relationship between a Birmingham university and a counterpart in China.  The Technology Innovation Centre at the University of Central England has long been working with universities in China. Senior officials from Changzhou University Town have been among those visiting Longbridge to view NAC-MG’s resumption of new MGTF production. (Birmingham Post, 6/20/07)

 

Economy

NANJING, March 20, SinoCast — Changzhou, a city in China’s eastern Jiangsu Province, has a thriving capital market, which supports a lot of companies to go public.  The city now has 13 listed companies with 14 stocks, raising CNY 5.041 billion. Seven China-listed companies such as Changchai Company Limited, Changlin Co., Ltd., Far East Industrial Stock Co., Ltd., Jiangsu Xincheng Real Estate Co., Ltd. raised CNY 2.611 billion by issuing eight stocks. The rest six companies went public on oversea stock markets, raising CNY 2.43 billion. Three of the companies were listed on oversea stock markets last year like Changzhou Galaxy Electrical Appliance Co., Ltd. and Changzhou Trina Solar Energy Co., Ltd., raising nearly CNY 1 billion. The city plans to list five companies on oversea stock markets, and to encourage two listed companies to refinance and one company to issue bonds, to raise at least CNY 2 billion this year. As more companies in the city are listed, big investment organizations march into the capital market. Nine securities companies have set up 13 operational bodies with total transactions of CNY 106.273 billion last year.  (9/27/07 Sinocast)

 

Companies

Trina Solar Limited (“Trina Solar” or the “Company”), a leading integrated manufacturer of solar photovoltaic products from the production of ingots, wafers and cells to the assembly of PV modules, founded in 1997, announced today the following updates relating to its previously stated capacity, operational, and technology roadmap targets that were achieved in the quarter ended December 31, 2007:

    – 150MW integrated capacity achieved for ingot, wafer, cell and module

       production

    – Successful ramp up of new cell production lines No. 3-6

    – Increased in-house cell processing to over 75% for the Q4 2007

       production

    – Realized in-house cell efficiency rates of up to 17.0%

       (monocrystalline) and 15.6% (multicrystalline)

    – Commenced commercial production of 220-watt multicrystalline-based

       modules

-Changzhou Dongfeng Agricultural Machinery Group realized an export value of RMB190.66M in 2006, up 34% year-on-year, and the company continued to maintain significant growth in exports in 2007, announced sources at the group on July 2nd. The group exported RMB94.2M of agricultural machines in the first five months of 2007, up 52% year-on-year. (7/3/2007)

 

 

- Swedish garden equipment maker, Husqvarna, has announced plans to build a new plant in Changzhou in China. The plant, which will cost around SEK 70mn (US$ 10.91mn EUR 7.64mn), replaces an existing plant and will increase the group’s annual production by approximately 1 million units. Husqvarna plans in addition to invest SEK 20mn to increase production in the Zenoah facility in Kawagoe in Japan as well as expand its R&D operation.  (Esmerk Swedish News, 11/6/07)

- Changzhou Pharmaceutical Factory Co. Ltd. in eastern China’s Jiangsu Province announced yesterday that the company aims to develop a formulation department in the European Union after it received EU Good Manufacturing Practice (GMP) certification last week. The company is one of only a few Chinese drug makers so far to be awarded the EU GMP certificate for finished drug production, along with Zhejiang Huahai Pharmaceutical Co. Ltd., Zhejiang Hisun Pharmaceutical Co. Ltd., Wuxi Kaifu Pharmaceutical Co. Ltd., and Zhejiang Conba Pharmaceutical Co. Ltd. Industry insiders agree that more and more Chinese pharmaceutical companies are eyeing the European Union or the United States as potential markets for their generic drugs. (11/14/07 China Business Newswire)

- CHANGZHOU, China, Dec. 11 /Xinhua-PRNewswire/ — US-based Biomet Inc., one of three largest medical devices manufacturers in the world, on the 11th signed an agreement with the Changzhou National Hi-Tech District, eastern China’s Jiangsu province, Biomet has decided to make an investment of US$15 million in the Changzhou Export Processing Zone mainly for production of orthopaedic implants and medical devices…Han Jiuyun, Vice Mayor of Changzhou municipal government, noted in his speech that development of the medical industry was given priority in Changzhou’s ”Eleventh Five-Year Plan,” and Changzhou would continue to improve its excellent platform for receiving transferred international industrial capital so as to provide Chinese and foreign businessmen with even better, faster and more effective services. (PR Newswire, 12/11/07)

-S3 Investment Company, Inc. (SIVC) announced that its Redwood Capital, Inc. subsidiary has signed Changzhou HaiJai Metallurgical Machinery Manufacturing Co. Ltd. (CMMC), a provider of metal fabrication, as a new client for its reverse merger services. Redwood Capital will assist Changzhou HaiJai Metallurgical Machinery Manufacturing Co. with efforts to access the U.S. capital markets through a reverse merger into a U.S. public company. (Knobias, 5/15/07)

 

 

 

-China’s Do How Chemical restarted September 23 its styrene monomer plant at Changzhou following a three-day shutdown, a company source said Monday.  The 210,000 mt/year plant was shut September 20 as the Changzhou State Power Company, which supplies it with power, was undergoing a turnaround.  The SM plant was running at 50% nameplate capacity as of Monday, a source said. The company expects to ramp up operating rates to 100% by Tuesday night, he added. Loss from the shutdown was estimated at 2,000 mt, leaving Do How with no spot supplies for September. In October, however, the company would have around 4,000 mt of SM for the spot market, the source said.  In May, US private investment firm Ewing Management Group acquired an 80% controlling stake in Do How Chemical, the remaining 20% being held by Chinese investors. (Platts Commodity News, 9/24/07)

- CHANGZHOU, China, June 25 /Xinhua-PRNewswire/ — Changzhou National Hi- Tech District announced today that on June 24 it was promoted to be one of the first international service outsourcing base cities at the provincial level in Jiangsu. The two special parks in Changzhou National High-Tech District, namely Changzhou Software Park and the Changzhou National Animation Base, have become the important carriers of the industry, and the district was selected as one of the top five “International Service Outsourcing Demonstration Zones in Jiangsu.” Six enterprises in the district, including OKI Software Technology Co., Ltd. and Changzhou CIC-Futong Technologies Co., Ltd., were recognized as the first “Key Enterprises Undertaking International Service Outsourcing in Jiangsu Province.”  Changzhou began developing its fledgling animation industry in 2000. So far, 31 deals have been signed worth 520 million yuan. (9/27/07, China Daily; 6/25/07 PR Newswire)

- Changzhou XD Transformer Co., Ltd. completed the installation and testing of six ZHSFPTB-112000kVA/220kV three-phase on-load tap-changing autotransformers according to the requirements of a Kazakhstan-based electrolytic aluminum plant, and has put the equipment into operation 100 days ahead of schedule. With a total value of RMB140M, this is one of the cooperation projects between the Chinese and Kazakh Governments, contracted by China Nonferrous Metal Industry’s Foreign Engineering and Construction Co., Ltd. The transformers are 12m long and 8.5m wide, weigh a total of 400t and consist of a main transformer and a voltage regulation transformer. (China Industry Daily News, 10/11/07)

-Changzhou Wujin Natsteel, now wholly owned by Taiwan’s Walsin Lihuwa, is investigating a possible expansion into stainless melting and rolling in the future.  Walsin Lihuwa, one of Taiwan’s major stainless producers, recently purchased NSL China Investments – Changzhou Wujin Natsteel’s parent company. Walsin Lihuwa is now keen to produce stainless at the newly acquired Changzhou plant, according to sources. (3/19/07, Steel Business Briefing)

 

 

- Walsin Lihwa Corp (1605.TW), the world’s third-largest supplier of copper wire, said it will proceed with its expansion in China as planned, regardless of new mainland labor regulations that will increase costs for manufacturers starting next year.  “Our expansion is moving forward in accordance with our previously set road map,” Walsin spokesman Lin Wang-tsai said. “The increase in labor costs is not seen as significant enough to put us off track,” he added.  Under the new Chinese labor rules that take effect Jan 1, companies must sign their employees to labor contracts.  Short-duration contracts will be more closely controlled: after two consecutive short-term contracts the worker’s next contract will have to be open-ended.  (Xinhua Asia, 12/20/07)

-Peoria Tube Forming Corp., an Illinois firm that makes metal tubes and pipes for the likes of Volvo and Caterpillar, has 60 employees in Changzhou — almost as many as the 70 workers it employs in its home factory, according to the company’s president, Rodger Butler. All but two of the firm’s Changzhou employees are Chinese, and all of them were recruited at the city’s large and recurring job fair, Butler said.  Peoria Tube’s wholly owned Chinese subsidiary, Pacific Changzhou Tubing Co., accounts for $3 million of annual revenue, Butler said, compared with $12 million in annual revenue from the U.S. operation. Although the Peoria shop still leads in producing revenue, Butler said the company sees its greatest growth potential in Changzhou, where labor costs are much lower than in the United States and only 25 to 30 percent of the labor costs in more famous Shanghai. (New York Times, 3/21/06)

 

 

Real Estate

- Kardan NV says its real estate subsidiary GTC Real Estate will purchase an additional land plot in Changzhou, China, located next to the land plot that was acquired earlier this year. The group adds an additional 90,035 square metres of land and approximately 252,000 square metres of building rights to the project announced mid January, when Kardan said it would develop its sixth real estate project in China after winning a tender to acquire 104,000 square metres of land for 18.4 mln eur. With this acquisition, the original land plot (of 104,000 square metres with building rights up to approximately 290,000 square metres) will be increased to a total of 194,035 square metres with building rights up to approximately 542,000 square metres. (AFX International, 2/1/08)

 

 

 

-Howard Johnson Hotel, a five-star hotel brand under the USA-based Wyndham Group, signed a cooperation agreement on the Kaina Business Plaza project on April 9th with Changzhou Rojana Real Estate Development Co Ltd, a subsidiary of Rojana Industrial Park Public Co Ltd in Thailand. Howard Johnson will join the Kaina Business Plaza project, the tallest project in Changzhou City. They will provide hotel management services to the project and property management services to the project’s hotel apartments. Their cooperation marks the development in Changzhou City of a new type of residential accommodation, the hotel apartment. (4/11/07, China Industry Daily News)

- In recent months, Changzhou City’s vacant apartment area saw a rapidly increasing trend. By the end of 2007, the City’s vacant apartment area covered 658,000sq.m, with the vacant area of residential apartments and business operations apartments accounting for 263,000sq.m and 300,000sq.m respectively, surging by 28.5%, 47.8% and 9.7% year-on-year. However, the vacant office space in the City dropped by 50.1% when compared to the end of 2006 to 14,000sq.m last year. (China Industry Daily News, 1/22/08)

 

-Investment in Changzhou City’s real estate development reached RMB22.5bn in 2007, surging by 31.6% year-on-year. In terms of apartment types, completed investment in the development of residential apartments, office buildings and business operations apartments was RMB15.92bn, RMB670M and RMB3.38bn respectively, surging by 29%, 32.8% and 29.1% year-on-year, with other investment soaring by 54.3% to RMB2.53bn. The completed apartment area in Changzhou City exceeded 6 million sq.m in 2007, with the year-on-year growth rate exceeding 50%. More specifically, the completed residential apartment area covered more than 4.7 million sq.m, soaring by nearly 60%. (China Industry Daily News, 1/22/08)

 

-Harbour Centre Development (51) said it succeeded in bidding a piece of land located in Changzhou, the PRC with a site area of4.43 million sqft and a total GFA of about 8.68 million sqft at Rmb1.47 billion through its wholly-owned Cheer Sky Investment.  The group said it will develop the Changzhou land into residential and hotel properties. (12/30/07, ET Net News)

 

Report 3 on Four of China’s Tier-3 Cities: Wuhu

Wuhu is home to Chery Automotive Company. As one of China’s rising automotive powerhouses
, Chery has an ambitious goal of selling 1,000,000 automobiles annually within the next five years. Preliminary plans to enter the US market were derailed when their partnership with Malcolm Bricklin fell apart. They’ll be back – probably hitting the US by 2012.

Many other companies and investments have started to grow around Chery’s remarkable story and home base. Here’s Wuhu’s summary:

Wuhu is located in southeastern Anhui. Historically known for its agriculture and trade, during the Qing Dynasty it had one of China’s biggest rice markets. Wuhu Port is an important deep water port on the Yangtze River. Today the city’s backbone industries include autos and auto parts, new construction materials, and electronic appliances. The city, with a population of 2.3 million, posted a GDP of approximately 48 billion yuan (USD6.3 billion) in 2006, an increase of 15.4 percent year-on-year.

In his 2007 best-selling book, China Shakes the World, former Financial Times Bureau Chief of Beijing and author James Kynge writes of Wuhu, “The city of Wuhu, a river port on the Yangtze’s middle course, was a backwater as recently as 1998. When I first went there at that time, it took me six hours along a bone-jangling, potholed road to reach it from Hefei, the provincial capital. When I did the journey again in 2002, it took an hour and a half, and Wuhu had been transformed. In just four years, four expressways, a road-and-rail bridge over the Yangtze, and a river port had been built. It was not possible, the vice mayor told me, to reach 250 million people within eight hours of the city center. ‘That is the population of America,’ he said with a smile.” (p31)

Wuhu 2004 GDP: 34.5 billion RMB; expected 2007 GDP: 64 billion RMB

Wuhu 2004 per capita GDP: 15,366;

Logistics

Wuhu Export Processing Zone

Wuhu Export Processing Zone (EPZ) is one of two major industrial bases in Wuhu. It was approved and set up by State Council in 2002, with a planned area of 2.95 km², the first phase consisting of 1.1 km². Since April of 2003, Wuhu EPZ has been operating service sectors including Customs Commodity Inspection, Banking, Logistics, Storage, etc. that cooperate for one-stop export services.

Wuhu EPZ enjoys the following advantages:
Geographic Situation: Wuhu is a transportation hub for East China, connecting 3 highways and 5 railways. The Wuhu Yangtze River Bridge is the largest dual-duty bridge of railway and highway. Wuhu port is currently the last deepwater port upstream in the Yangtze River which can provide major logistics support to export-oriented enterprises along the Yangtze. The largest dual-use (railway and highway) bridge over the Yangtze River is in Wuhu,

Pillar Industries: The Wuhu EPZ lies within Wuhu Economic & Technological Development Area (WEDA), which is the most important industrial production base in East China and now has more than 150 enterprises in production, forming 3 pillar industries: automobile and automotive parts, electrical appliance, and building materials.

Human Resources: Wuhu has two universities, six colleges, and more than twenty technical schools offering over 60,000 students available for corporate recruitment of all majors and at different entry levels.

Investment: Wuhu PZ is located between the new urban area and the old industrial area, hence its infrastructure and water supply are stable after long-term construction with plentiful utility supply, including power, natural gas, and water. Land use rights are cheaper than in the rest of WEDA.

Wuhu Economic and Technological Development Zone

Wuhu Economic and Technological Development Zone (WEDZ) was approved as a state-level development zone in April 1993. The zone has a developed area of 10 square kilometers and is situated in northern Wuhu.

Transportation and Infrastructure
The main traffic routes in the zone are part of the municipal transportation network and are directly joined with three expressways leading to Shanghai, Hangzhou, and Hefei. as the 3 expressways and 5 railways mentioned above all converge here. Wuhu Harbor is also the last deep-water port at the upper stream of the Yangtze River joining all important ports around the globe. Water carriage routes were opened to such designations as Hong Kong, Japan and Southeast Asia. WEDZ is one hour’s ride to Luokou International Airport of Nanjing, and Luogang Airport of Hefei, both of which have flights to major domestic and foreign destinations.

-2 of China’s 4 eastern trunk railways of Beijing to Nanjing, Shanghai to Nanjing, Nanjing to Wuhu and Wuhu to Yingtan (Jiangxi) meet in Wuhu, connecting with major trunk railways and large and medium sized cities all over China. So Wuhu is an essential railway hub to connect with Central, East, and North China.

Manufacturing Industries
Three pillar industrial groups have come into shape in WEDZ, including automobiles and parts, electronics and electrical appliances and new building materials.

In view of its industrial structure and current stage of development, WEDZ encourages investment in the following sectors:

Automobile and parts:
Development and manufacturing of

• Car bodywork and accessories
• Car engines, gear-boxes, and other key components
• Car moulds
• Electronics
• Precision founding of major car components, black founding, and colored casting semi-finished production
• Light materials
• Key car parts and components
• Car discharge emission systems
• Car accreditation and inspection systems
  
  

Electronics and electrical appliances:

• Intelligent household appliances
• Electronic components
• Photo-electronic products
• Integrated Circuits

New materials:

• New building materials
• New energy-saving materials
• Micro-electronic and photo-electronic materials
• Surface coatings and films
• High-quality structure materials
• Environmentally friendly materials
  
  

Bio-medical and bio-pharmaceutical products:

• Bio-medicines and drugs
• New traditional Chinese medicines
• Synthetic and chemical medicines
• Medical equipment and electronic apparatus
• Refined chemicals.

Software products:

• Software platforms and intermediaries for all types of business applications
• Application systems in broad-band networks
• Critical software for corporate informatization and information security systems
• Management software for E-commerce

  Administration Committee
  Tel: 86-553-5841768
  Fax: 86-553-5841876
  Email: wuetdz@mail.ahwhptt.net.cn
  Wetsite: http://www.weda.gov.cn/eindex.html

http://knows.jongo.com/res/article/7131

Human Resources

-Anhui Normal University is located in Wuhu. Founded in 1928, it is the oldest institution of higher education in Anhui Province and also one of the national comprehensive universities established at a very early stage. The university is a major scientific research institution. In addition to Anhui Normal, Wuhu’s other major institutes of higher learning include: Anhui University of Technology and Science, Wannan Medical College, Wuhu Radio and Television University, and Wuhu Vocational Institute of Technology

Principal: Jiang Yumin
Zip code: 241000
Address: NO.1 Beijing Road(E), Wuhu, Anhui
Tel: (0553)3869234
Email: ymjiang@mail.ahnu.edu.cn
Website: http://www.ahnu.edu.cn/nic/

-Some factories in Wuhu (and surrounding regions) pay workers the equivalent of $0.30 an hour.

Companies

-Yinghua Wire sold controlling interest of a wire harness plant in Wuhu to the Michigan company KenSa,

-Wuhu’s Conch International Hotel is consistently filled with guests from Germany, Australia, Japan and the United States.

-There are 104 factories owned or partly owned by foreign companies, up from 55 just five years ago.

-Germany-based Siemens AG builds automotive gauges in Wuhu.

-Tower Automotive, based in Troy, builds suspension components.

-Wuhu is one of dozens of industrial centers in China, which has become “a Candyland for Rust Belt manufacturers hungry for cheap labor.”

Foshan Rising

Report 2 on Four of China’s Tier-3 Cities: Foshan

The second in our series of tier-3 cities, Foshan is on the rise. It recently broke the 300 billion RMB GDP mark (for FY2007), and along with 5 tier-2 cities for 2007. Hence, it is probably fair to call Foshan a tier-2 city at this point, but because it flies so low on the radar, we will keep it in the tier-3 grouping for now. Once again, if not otherwise noted, the information comes from Wikipedia.

 

 

Foshan (Chinese: 佛山; pinyin: Fóshān) is a prefecture-level city in central Guangdong province, People’s Republic of China. The city has jurisdiction over an area of about 3,840 km² and a population of 5.4 million of which 1.1 million reside in the city proper (2000 census figures).

Total GDP ¥292.67 billion; Per Capita GDP ¥50,207 (2006)

Administration

The prefecture-level city of Foshan administers 5 county-level divisions, all of which are districts.

• Chancheng District (禅城区)
• Nanhai District (南海区)
• Sanshui District (三水区)
• Gaoming District (高明区)
• Shunde District (顺德区)

These are further divided into 64 township-level divisions, including 37 towns and 27 subdistricts.

Transportation and Infrastructure

External links

-Foshan Airport was once a regional airport with mixed usage (both military and domestic transport) since January 22, 1987, as it became a base of China United Airlines (CUA) in Guangdong Province. When CUA ceased domestic flights in November 1, 2002, Foshan Airport remained military service only. The airport resumed its regional airport status in 2005 when the regrouped CUA, which was partly purchased by Shanghai Airlines, resumed domestic flight service. It is expected domestic flight linkages between Foshan and at least 10 Chinese cities including Beijing, Nanjing, Hangzhou, Yinchuan will begin in the near future.

-Foshan is close to Guangzhou and considers its link with Guangzhou very important. A Guangzhou-Foshan metropolitan region is being formed as well as the 37-km Guangfo subway line linking the two cities.

-Foshan is a main interchange for railway routes linking Guangzhou, Hong Kong, western Guangdong Province and Guangxi Province. It is connected with Hong Kong via the KCRC Guangdong Through Train service from Foshan railway station. The inter-city through train service was extended from Guangzhous to Foshan in the late 90s.

- China’s Ministry of Communications and the Communications Administration of Guangdong Province have jointly approved the planning of constructing Foshan Port in Guangdong in mid-July 2007. The Foshan Port under planning will have a cargo flow of 110 million tonnes by 2010 and 150 million tonnes by 2020. The Foshan authority plans to bring Hong Kong’s logistics industry to the port. (NewsTrak D-(Jan. 16, 2008)- Construction on the second phase project of Foshan Aomei Aluminum Co., Ltd., the Southeast Asia’s largest aluminum material enterprise, has been completed, bringing the company’s annual production capacity to 200,000t. According to a source, Aomei Aluminum is the largest aluminum processing enterprise and largest production base funded and established by Qili Industry Group, it is headquatered in Malaysia’s Kuala Lumpur and has large production or sales bases in Great Britain, Australia, Hong Kong and Dubai.( www.chinainfoworld.com )

-The first phase of the first specialized logistics distribution base in Foshan City’s Sanshui District formally began operations on December 12th, according to the latest news released by Foshan Automobile Transportation Group. The base occupies an area of more than 6.67ha (100mu) and was funded by Foshan Automobile Transportation Group with RMB40M. The base will provide modern logistics services such as storage, distribution, freight forwarding, third party logistics and value-added services of the supply chain, with the designed monthly cargo transportation volume at 60,000t and the truck handling volume exceeding 3,000 units. (China Industry Daily News, 12/14/07)

Economy

Agriculture

There are Agricultural Model Districts (AMD) around the prefecture, such as Shunde Chencun AMD, and AMDs in Daili Town, Shatou Town and Locun Town in Nanhai, with a total area of about 9.4 km². The AMDs aims at providing an all-round environment for modern agriculture. Agricultural process is upgraded through technology, and sale service is incorporated with a new style tourism, that attracts target clients. The modern integrated practice mode resulted in the reputation of the largest base for wholesale, food production, storage and logistics of agricultural products in Guangdong Province.

Manufacturing industries

Following Shenzhen and Guangzhou, Foshan is the third largest manufacturing base in the Pearl River Delta. Once home to a strong State-Owned Enterprises sector, its current economic strength lies in private firms and Township and Village Enterprises in Shunde and Nanhai. In 2002, private firms contributed 56.12% of the industrial output and firms from Hong Kong, Macau, and Taiwan contributed 63.44% in exports.

Key industries in Foshan include:

• household electrical appliance and tool manufacturing
• furniture
• non-metal ore and manufacturing
• ceramics
• garments
• chemicals
• electronic information
• medicine
• food and beverages
• building materials
• automobile parts
• high technologies
• electronics and communications
• stainless steel products
• Plastic products

Towns in Foshan specializing in pillar industries are as follows:

• Beijiao Town, Shunde (顺德北滘) – household electrical appliances
• Chencun Town, Shunde (顺德陈村) – flowers and horticulture
• Dali Town, Nanhai (南海大沥) – aluminium products
• Lecong Town, Shunde (顺德乐从) – furniture production and distribution
• Nanzhuang Town, Nanhai (南海南庄) – building materials
• Xiqiao Town, Nanhai (南海西樵) – tourism and textiles
• Yanbu Town, Nanhai (南海盐步) – underclothes

Several well-known brands to come out of these pillar industries include Midea, Kelon (before its 2005 bankrupcy), Jianlibao, and Galanz Group (Galanz Group and Midea Group jointly hold more than 80% of China’s microwave oven market, according to a report by China Market Monitor Co., Ltd.). Foshan’s furniture and lighting industry is known as the world’s largest, including the world’s largest furniture wholesale market and the world’s largest lighting wholesale market.

Development strategy

Foshan aims to become a manufacturing giant and the third largest city in Guangdong. To do this, it has pledged to make large-scale investments in the construction of transportation and energy infrastructure. Urban development will focus on the Central Urban Group and Shunde Urban Group, each with more than one million inhabitants.

 

 

-China Development Bank, a policy bank in the country, has granted more than CNY 2 billion loan to Nanhai district, Foshan city, China’s southern Guangdong province. The local government used the capital to finish the preliminary construction of Qiandeng Lake and planned to set up a financial business zone there. Guangdong, a developed province in China, wants to build Qiandeng Lake to be a financial high-tech development zone, which covers an area of some 4.5 square kilometers. Chen Yunxian, mayor of Foshan, said that Qiandeng Lake was positioned as a financial logistics base for the province, containing data processing center, call center, disaster recovery center, training center as well as innovation and R&D center.

Companies

- Chi Mei Optoelectronics Corp. (CMO), the No. 2 manufacturer of thin film transistor-liquid crystal display (TFT-LCD) panels, plans to set up a LCD module (LCM) production plant in northern Vietnam in 2008 and form a panel-industry cluster in the region, according to company president Ho Chao-yang. Ho said CMO’s two LCM plants in mainland China have effectively solved the labor-shortage problem at his company’s facilities in Taiwan and cut costs.

- Shanghai. October 16. INTERFAX-CHINA – The Guangdong provincial government announced yesterday that the province’s largest LCD module manufacturing line, established by Taiwan-based Chi MeiOptoelectronics in the city of Foshan, has started operation and is expected to produce more than 200,000 units of LCD modules by the end of this year. The line was established with an investment of $480 million and is expected to produce more than 10 million units of LCD modules next year, according to the Guangdong government. Guangdong Province plans to build Foshan into a TFT-LCD TV center by establishing a sound supply chain for the TFT LCD TV industry, including the supply of LCD modules, displays and TV components. Chinese TV giant Hisense also started construction of a flat panel TV manufacturing center in Foshan at the end of September, planning to produce 1 million units of flat panel TVs after completion.

-HSBC opened its thirteenth Global Service Centre in Foshan, Guangdong province on December 3. Vincent Cheng, chairman of HSBC Asia-Pacific, says Foshan is the perfect location to set up a global logistics centre thanks to its outstanding investment environment and urban planning. The new centre is situated at the National High-tech Development Zone in Foshan and is equipped with the most advanced communication and information technology facilities. (NewsTrak Daily, 12/4/07)

- In Guangdong, the home province for Belle International, Foshan-based Saturday Shoe Co., Ltd. has also secured VC investments from Lenovo Capital and is preparing to go public in 2008. “From 2006 on, the prices of raw materials like leather have been on the rise, but our shoe products have to remain where they are now, otherwise we’ll lose our competitiveness,” explains Wu. Saturday, along with other Chinese shoe brands such as Aokang, Kangnai and Fuguiniao, are also grappling with rising prices for raw materials. “The current net profit margin of the leather shoe industry is about 8%,” claims Wu. Despite the rise of raw materials and labor costs, Saturday still has a bigger net profit margin than the industrial average with its higher brand value… Saturday shares the idea of Belle International: maintenance of the department store channel is a part of the brand management, because it gives an opportunity to contact the consumers and to deliver the brand value. Saturday now has over 1,000 sales outlets, 70% of which are self-operated stores and 30% franchised stores. (11/8/07 China Business Feature)

- Zhang Shuhong, a 52-year-old businessman, had apparently committed suicide, just days after Mattel blamed his company, Lee Der Industrial, in Foshan, in southern China, for the recall of one million toys coated in toxic lead paint. In a summer of high-profile recalls of Chinese exports — pet food, shellfish, tires — Mr. Zhang’s suicide read like the latest twist in a morality play. Each week, it seemed, brought news of another faulty Chinese product; and with it, growing concerns about unscrupulous Chinese businessmen: cutting corners; pouring cheap, sometimes lethal, ingredients into their products; endangering consumers around the world, even children, to make a bigger profit. But at the Lee Der factory in Foshan, an industrial city 140 miles northwest of Hong Kong, Mr. Zhang’s colleagues and workers tell a less familiar narrative. They say that Mr. Zhang was a victim, too — of his own duplicitous suppliers, of China’s faulty supply chains, and of the pressures of its loosely regulated brand of capitalism, where Chinese entrepreneurs feel squeezed between Western companies’ appetite for cheap goods and the fierce local competition to satisfy it. (8/23/07 New York Times)

- The Sanshui District Bureau of Economy and Trade revealed that Tsingtao Beer Sanshui Company will improve its production capacity in 2007 and Budweiser Beer will begin operations in this district at the end of 2008, thus the District’s beverage industrial output value is expected to soar in the next one to two years.(China Industry Daily News, 1/14/08)

- Beiqi Foton Motor Co., Ltd. an SOE holding company mainly involved in car manufacturing in China, plans to increase the production capacity of its factory in Nanhai District, Foshan in southern Chinese province of Guangdong. Construction of the new factory is planned to start from May or June 2008. The phase I project is expected to be finished in 2009 and the whole project will be finished in 2015. By then, the new factory, which mainly produces SUVs, pickups, small MPVs and the like, will be four times larger than the old one. It aims to seek sales of more than CNY 5 billion by 2010. (Sinocast, 1/10/08)

- Guangdong Foshan Glanz Co., Ltd., a leading home appliances manufacturer in China, planned to sell 6 million air-conditioners in 2008, with 70% of them sold at home. The company intends to export 30% of output in 2008, higher than 20% in 2007. A report by Boston Consulting Group tells that more and more Chinese people are interested in high-end and expensive products and five times more consumers tends to increase spending than those to reduce. (Sinocast, 1/9/08)

Labor

- More workers in Guangdong Province will be able to negotiate with their employers and fight for higher wages, according to the provincial labor and social security department. The wage negotiation system was first launched in Guangzhou in 2001, and has covered 44,000 enterprises and benefited 2.4 million workers up to June this year. Workers have signed more than 14,000 collective wage agreements with various employers… Workers can nominate representatives or the labor union of their factories to negotiate on their behalf with employers. They can even hire professionals, such as lawyers or consultants, as long as they are familiar with the labor law. (8/15/07, China Daily)

-Guangdong is on the verge of finalizing details of a labor law that will place about 20 million factory workers under better welfare protection but add to the burden of manufacturers already reeling from rising production costs. As a nationwide policy to be promulgated on January 1, the law will set welfare standards and responsibilities of employers and employees by binding the two parties to a labor contract. Welfare protection such as work hours, extra shift compensation, commission and wages, holidays, arrangement for parting and other benefits are expected to be key conditions on a contract, according to some manufacturers in Guangdong. The Guangdong Labor and Social Security Bureau was studying the feasibility of regulating wages such as distribution of wages and setting up a mechanism to lift salaries by engaging about 10 enterprises in Foshan, Guangzhou media reported. (11/19/07 South China Morning Post)

Tax

-(Jan. 14, 2008)- The tax payments by Sanshui District’s beverage industry surged by nearly 30% in 2007 and accounted for 12% of the District’s total, revealed Foshan City’s Sanshui District Office of the State Administration of Taxation. In 2007, Tsingtao Beer Sanshui Company paid more than RMB103M in tax, the highest among Sanshui’s tax payers, while the tax payments generated from Jianlibao drink products increased over 2006 and exceeded RMB56M last year. (1/14/08 China Industry Daily News)

GDP

- Calculating based on the data for the third quarter of 2007, Foshan, Ningbo, Nanjing, Chengdu, Dongguan, Wuhan and Dalian have joined the “300-billion-yuan GDP Club” for Chinese cities in 2007. 300 billion yuan is equivalent to US$41 billion. From 2006 to the first three quarters of 2007, annual economic growth in Foshan was 19.2 per cent, 19.3 per cent and 19.2 per cent. (1/2/08, Asia Pulse)

Real Estate

- Shui On Land Limited (” Shui On Land”, Stock Code: 0272) today has successfully acquired by auction the development right and land use rights of the land in Zumiao Donghua Lane, Foshan City, Guangdong Province. Shui On Land will capitalise on the huge potential and rapid growth of Foshan to develop an integrated project, aiming to facilitate the transformation of the city into a major economic and cultural hub in Southern China. The site has a planned net developable area of approximately 517,471 square metres with a gross floor area of approximately 1.5 million square metres. The new integrated project will include residential and office buildings, as well as retail, restaurant, entertainment, tourism and cultural facilities. (11/30/07 irasia.com)

Report 1 on Four of China’s Tier-3 Cities

Today is the first of four posts on tier-3 cities. We will feature Shijiazhuang, Changzhou, Wuhu, and Foshan (which at this point is actually a tier 2 city, but we’ll still group it with these other Tier 3 cities). The common theme among them is lots of money, not a lot of recognition among us in the west. They are all hot spots for investment among the Chinese themselves and other Asian investors. There is no set paradigm for the reports and they are really a collection of articles from various media sources over the last year to highlight major industries, infrastructure, real estate, and the economy at large in each city. Please think of this as a clipboard of media on each city that should shed some light on what is going on in each area for those looking for a general overview of what is going on beyond the borders of China’s international cities. Each report is infused with a little bit of background from Wikipedia to set the stage. So, without further ado, we give you Shijiazhuang:

Shijiazhuang (simplified Chinese: 石家庄; traditional Chinese: 石家莊; pinyin: Shíjiāzhuāng, literally, “The Stones’ Village”) is a prefecture-level city about 320 kilometers south of Beijing and the capital of Hebei province. Shijiazhuang was established in the Second Sino-Japanese War as a communication outpost. Shijiazhuang is China’s first big city that allows immigration population settles in it without paying any fees. (Wikipedia on Shijiazhuang)

Administration

-Shijiazhuang has direct jurisdiction over 23 districts, counties, and cities.

Sister cities

• Bielsko-Biala, Poland
• Cheonan, South Korea
• Des Moines, Iowa, United States
• Edison, New Jersey, United States
• Saskatoon, Saskatchewan, Canada
• Soria, Castilla y León, Spain

Infrastructure and Transportation

-Shijiazhuang is a transportation hub: it is at the intersection point of the Beijing-Guangzhou, Taiyuan-Dezhou, and Shuozhou-Huanghua railroads and many expressways, including the Beijing-Shenzhen and Taiyuan-Cangzhou Expressways. The Shijiazhuang Daguocun International Airport has flight connections to major cities in China.

-The Industrial and Commercial Union of Shijiazhuang city in Hebei province of China set up a logistics association in the middle of December 2007. The association will perform as a communication platform between enterprises and the government. It encourages local logistics enterprises to unite and to share resources. The logistics industry is a major growth momentum of the local economy. It covers cargo transportation, loading and unloading, storage and distribution related to construction, electronics and clothing businesses. (NewsTrak Daily, 1/3/08) -Shijiazhuang High and New Technology Industrial Development Zone was established in March, 1991. It is among the state band high-tech zones approved by State Council. At the beginning, the zone is located at the west wing of the present one. For meeting the needs of development, the CPC Committee and People’s Government of Shijiazhuang City decided to join Shijiazhuang Economic & Technical Development Zone and Liangcun Economic & Technical Development Zone with Shijiazhuang New and High-tech. Development zone from the year 1991, which has formed the frame of “One zone and three Gardens.” The zone has the designed area of 18sq.km., with 40,000 staff. (http://www.21sjzg.com/) -Taihang Mountain Tunnel, the key project of Shijiazhuang ¨C Taiyuan Railway, was completed on December 22nd. The passenger railway is a key project in the Eleventh Five-Year Plan period (2006-2010), and is China’s first passenger railway project, on which construction began, totaling 189.93km in length. Construction on the railway project began on June 11th, 2005, and is expected to be completed at the end of 2008. The 27.8km-long double-hole Taihang Mountain Tunnel has established one entrance, one exit, nine slope mines and eleven construction routes. (12/27/07, China Industry Daily News) - The construction of an express passenger railway which links Beijing with Shijiazhuang, capital of north China’s Hebei province, will begin in June and finish in four years. The National Development and Reform Commission has approved the project, and a ground breaking will be done on June 1, said a source with the city government of Shijiazhuang, adding a special company will be set up to take charge of the construction. The new line is planned to alleviate transport pressure on the northern end of Beijing-Guangzhou railway, a north-south trunk route, and boost the development of areas around Beijing. The projected route will stretch 281 km starting from Beijing West Railway Station and ending at Shijiazhuang South Railway Station. Trains can run at a speed of 350 km per hour. Speed in the initial stage can be 300 km per hour, cutting the transit time to just over an hour. The investment of 43.87 billion yuan (about 6.01 billion U.S. dollars), will be shared by the Ministry of Railways and the governments of Beijing Municipality and Hebei Province. (Xinhua, 1/12/08) -Shijiazhuang Public Transportation Company increased the number of natural gas buses in 2007 on the basis of environmental protection principles, according to the latest news released by Shijiazhuang City’s Public Transportation Department. The City purchased 371 buses in 2007, with natural gas buses accounting for 150 units, thus bringing the total number of its natural gas buses to 748. Shijiazhuang City presently has 2,210 public buses, with natural gas buses accounting for 33.8% of the total. (1/29/08 China Industrial Daily News)

- The main route of Shijiazhuang City’s Loop Highway (Shihuan Highway) was opened to traffic on a trial basis on November 11th. Construction on the Shihuan Highway began on September 30th, 2005. The first phase of the project, involving a total investment of RMB4.77bn, is 79.9km long, with the length of the first-grade bi-directional six-lane highway accounting for 46.1km. A total of 62 bridges and culverts have been established. The main body of the 74.2km-long main route of the Shihuan Highway has been completed, while the other projects are under construction.(11/13/07 China Industrial Daily News)

- Shijiazhuang Customs and Qingdao Customs formally signed a cooperation MOU on customs reform on May 22nd. This is the second cooperation agreement on customs reform between inland areas and coastal areas, following the agreement between Shanxi and Tianjin Customs. The new regional customs-passing system will provide companies in Hebei Province, especially in central and southern areas, a more convenient way of passing customs. (5/24/07, Xinhua) - Shanghai Juneyao Airlines opened two air routes on July 10th, namely Shanghai (Hongqiao) ¨C Shijiazhuang and Shanghai (Pudong) ¨C Baotou. Round-trip flights will operate on the Shanghai ¨C Shijiazhuang route on Tuesdays, Wednesdays, Fridays and Sundays, and a weekly round-trip flight will operate on the Shanghai ¨C Baotou route. (7/11/07 Xinhua) -Relevant sources from Shijiazhuang Government revealed on May 29th that the first phase of the Runfeng Logistics Center project opened on May 27th. The first phase of the center projected is located at the intersection of the city’s South Second Ring Road and Jianshe Street. Construction of the logistics center was divided into two phases, with a total area of 13.33ha (200mu) and an investment of RMB20M. 180 logistics enterprises are now settled in the center, including eight of China’s top ten logistics companies, such as Guangda Logistics and Chengxin Logistics. Once the center goes fully into operation, it will transport and distribute over 10,000 tons of cargo daily. (5/30/07 Xinhua) - Tianjin Port is confident about achieving its target of handling 300 million tons of cargo by 2010. With its seamless cargo transport operation, Tianjin Port has brought in efficiency to its port economy. To reduce transport cost and time, it has formed a literally “waterless port” or seamless operation with Zhengzhou and Shijiazhuang. The waterless port arranges effective logistics from the source of cargo, to custom clearance, ship order booking, storage, and to packaging all in one effective sequence. (8/20/07 NewsTrak Daily) -Hebei Province in Central China aims to see its ports be capable of handling 592 million tons of cargo, including 1.2 million containers (TEU), in 2010. (1/8/08 Sinocast) - SHIJIAZHUANG – Several petrochemical projects will be launched at Shijiazhuang Petrochemical Base in Hebei province, the nearest province to Chinese capital Beijing. (8/24/07 Asia Pulse)

-Shijiazhuang Section of the South-to-North Water Diversion project will be completed at the end of 2007, and after the trial period, it will be able to transmit water before April 2008, according to the news released by the Beijing Water Affairs Bureau on November 5th. Hebei Province will transmit 300 million cbm of water to Beijing annually. (11/6/07 Xinhua)

Human Resources

-Shijiazhuang Railway Institute is a prestigious university of applied engineering science as well as the specialties for Arts Science, Economy, Management and Law. It has formed a closed educational system, including graduate students, undergraduates, specialty students and the adult education. More than 40,000 students, famous academies and experts in engineering technology and advanced management have been cultivated. The institute has been enrolling students from the whole country. Now the institute has established 12 schools and 6 departments including 45 majors with more than 16,000 full-time students. We have 13 specialized approved accredited master degree programs such as the Civil Engineering, Construction Engineering, Bridge and Tunnel Engineering, Mechanical Design and Theory, Transport Tools Application Engineering, Managing Science and Engineering. Road and Railway Engineering, Materials, Electric Power Electronics and Electronic Conveying, Computer Application, Solid Mechanics, Disaster Prevention and Reduction Engineering and so on. At the same time, it was authorized to enroll doctor degree students, award master degree to those who have reached the required level. The institute possesses a faculty of 1,500, in which 700 people specialize in educational science, 270 professors, associate professors or senior engineers, 74 teachers have got the doctor degree. 46 young experts have made outstanding contributions to Hebei province even to the nation. Meanwhile, academician from academy of science, academy of engineering or famous professors were appointed as our part-time professors. (http://knows.jongo.com/res/article/3344)

-Hebei Medical University is located in Shijiazhuang, Hebei Province, North China Plain. It consists of the original Hebei Medical College, Hebei Provincial College of Traditional Medicine and Shijiazhuang Medical College, which were combined in 1995. Of them the original Hebei Medical College was established the earliest and grew out of the Hebei Medical School which was set up in 1915. Hebei Medical University has become a comprehensive medical university composed of western medicine, traditional medicine, pharmacy and other subjects. It has 14 colleges, and 15 specialities. The university has Basic Medicine, Clinical Medicine and Integrated Traditional and Western Medicine Postdoctoral Research Institutions. It has been authorized in conferring Ph.D. degree in 14 and master degree in 47 specialities. There are 9781 full-time students in school, 6728 adult students, and nearly 50 foreign students from South Korea and Japan and so on. Now it has been qualified to enroll students from Taiwan, Hongkong and Macao. (http://knows.jongo.com/res/article/3270)

-Hebei University of Economics and Business is a multi-subject and Comprehensive university offering a wide range of courses in Economics, Administration, Laws, Literature, Engineering and Science, with emphasis on the study of Economics. HUEB is privileged to confer Master’s and Bachelor’s degrees on qualified students. At present the university has 13 master degree programs and 39 bachelor degree programs. The students of the university come from 16 Provinces, cities and self-governing municipality. The student population is more than 18000. Besides the full time students, the College of Continuing Education of the university has more than 13000 part-time students. (Website:http://www.heuet.edu.cn/)

-The Institute of Genetics and Developmental Biology (IGDB) of the Chinese Academy of Sciences (CAS) was founded in 2001 by merging of three former Institutes of CAS, the Institute of Genetics, the Institute of Developmental Biology and the Shijiazhuang Agricultural Mordernization lnstitute. The Institute has a strong and young scientific community. Among 614 employees, 469 persons are directly involved in research activities. Scientists in the Institute work with plant and animal models to address fundamental questions in life sciences, such as genetic control of growth and development, gene expression, signal transduction, structural and functional genomics, and bioinformatics. (Website: http://www.genetics.ac.cn) -Shijiazhuang City in Hebei province held the 5th Overseas Chinese Professionals Economy and Technology Discussion Fair on 26 June, 2007. The theme of the fair was to increase communication and cooperation with overseas Chinese businessmen. The fair is organized by Shijiazhuang City Government with support from the State Council. Over 100 overseas Chinese from the US, Canada, Singapore, Australia, France, Japan and other countries attended and participated in the fair. Among the participants, there were professionals in medicine, new material, electronic information and financial investment services. Successful entrepreneurs and businessmen were also invited to the fair that aimed to promote innovative power. (7/18/07, News Trak Daily)

Economy

- Shijiazhuang’s history tied to medical sector In 1953, the Ministry of Chemical Industry and the Ministry of Light Industry decided to construct a large-scale pharmaceutical base in Shijiazhuang, one of 156 prioritized projects of China’s first-ever Five-Year Plan. In the early 21st century, the National Development and Reform Commission approved Shijiazhuang as the first national biological medicine production base. In 2004, Hebei’s provincial government said it would build a biological medicine industry belt beginning in Shijiazhuang and covering neighboring cities. Shijiazhuang’s government said it plans to transform the city into China’s “medicine capital” in the next five to 10 years. (6/19/07 China Daily)

-Shijiazhuang City’s prices for packaged chicken, aquatic products, eggs and sugar dropped in December 2007, while the prices for meat, vegetables, fruits and edible oil increased, according to the monitoring data of daily necessities released by the Municipal Bureau of Industry and Commerce. (1/8/08 China Industry Daily News)

- Shijiazhuang is also quickly becoming a consumer market that pursued by both domestic and foreign enterprises. In 2006, the city’s per capita disposable income reached RMB11,250 (US$1,486), up 12% from 2005. ;On Zhongshan Road, the major business street in Shijiazhuang, you’ll spot “2,999″ emblazoned on passing buses. A closer look will reveal the numbers are an advertisement for RMB2,999 HP computers. The computer maker rarely launches advertising campaigns of this size in larger cities. “The changes started in the second half of 2006,” says Xing Kai, a local HP distributor. “People here had a vague idea about HP, but now, it has dropped its airs, and released a spectrum of medium to low-end products. We’re delighted with it. You know, the supply of the RMB2,999 (US$396) model can hardly meet demands.” (8/6/07 CEO CIO China) -The total foreign trade value of Shijiazhuang City in Hebei Province exceeded US$ 5bn and hit US$ 5.13bn in 2007, up by 22.62% year-on-year, with exports accounting for US$ 4.149bn, rising by 21.98% year-on-year. More specifically, Shijiazhuang’s exports of steel products soared in 2007, while exports of fur and leather garments dropped sharply. In addition, exports of hi-tech and electromechanical products increased rapidly, while antibiotics exports surged.(China Industry Daily News, 1/23/08) - In the first seven months of 2007, the traditional Chinese medicine export value was US$ 3,265,777 in Shijiazhuang City of Hebei Province, down 3.73% year-on-year, according to the latest statistics released by the China Chamber of Commerce for Import and Export of Medicines and Health Products on September 17th. Of the total, the export value of traditional Chinese medicinal materials and medicines in ready-to-use form reached US$ 2,332,197, down 7.06% year-on-year, the export value of traditional Chinese medicinal extracts was US$ 226,588, down 1.37% year-on-year, the health product export value was US$ 3,748, down 91.28% year-on-year, and the export value of Chinese patented medicines was US$ 703,244, up 15.19% year-on-year. (9/21/07 Xinhua) - A total of 14.35 million overseas and domestic tourists visited Hebei Province’s Shijiazhuang City in the first eight months of 2007, with the tourism income reaching RMB7.2bn, rising 9% and 16% year-on-year respectively, according to the latest statistics released by Shijiazhuang City’s Bureau of Tourism. (9/21/07 Xinhua) -Shijiazhuang – Nearly 7,000 hectares of biodiesel forest will take shape in the north China province of Hebei this year, part of a national campaign to fuel the fast growing economy in a green way. In no more than five years, the Pistacia chinensis Bunge, whose seeds have an oil content of up to 40 per cent, will yield five tons of fruit and contribute about two tons of high-quality biological diesel oil, according to the provincial forestry administration. (1/17/08 Asia in Focus) Hebei is among seven regions designated by the State Forestry Administration (SFA) in 2006 to develop biofuel demonstration forests.

Companies

-Shijiazhuang Listed Companies:

1	Changjiang Securities Co Ltd	China	Listed	000783.SZ	Petrochemicals
2	Huda Technology & Education Development Co Ltd	China	Listed	600892.SS	Wires/Cables
3	Jointo Energy Investment Co., Ltd. Hebei.	China	Listed	000600.SZ	Real Estate Transactions
4	Shijiazhuang Baoshi Electronic Glass Co Ltd	China	Listed	000413.SZ	Components for Electronic Goods
5	Shijiazhuang Changshan Textile Company Ltd	China	Listed	000158.SZ	Textiles
6	Shijiazhuang Dongfang Thermoelectric Co Ltd	China	Listed	000958.SZ	Electricity/Gas Utilities
7	Shijiazhuang Aircraft Industry Co.,ltd	China	Unlisted		Aerospace Products/Parts
8	SHIJIAZHUANG BAOSHI GLASS	China	Unlisted

-Shijiazhuang Pharmaceutical Group Ltd., one of China’s largest antibiotic producers, is planning to launch an antibiotic production technology development project in the near future, a company official said today. “The feasibility of the project, Key Technology Innovation for Mass Producing Antibiotics, has recently passed expert appraisal,” said Zhang Heming, vice director of the general affairs office of the company, adding that the project will receive government investment, though he declined to specify the amount. The project will focus on creating technology capable of producing antibiotics on top of developing fermentation technology and equipment, as well as separation engineering technology and equipment… Shijiazhuang Pharmaceutical Group Co. Ltd., Harbin Pharmaceutical Group Co. Ltd., North China Pharmaceutical Group Co. Ltd., Shandong Lukang Pharmaceutical Group Co. Ltd. are the four largest antibiotic manufactures in China. (10/17/07 China Pharmaceuticals and Health Technologies Newswire) -Legend Holding, the parent company of Lenovo Group (HK:0992, LNVGY.PK) has finally concluded its buyout negotiation with Shijiazhuang Municipal State-owned Assets Supervision and Administration Commission, the owner of Shijiazhuang Pharmaceutical Group Co., Ltd. The two sides on June 16 formally signed an agreement to transfer the 100 percent stake in the drug maker to Legend Holding for 870 million yuan, 30 million yuan higher than the bottom price originally set for auction. (6/18/07 Xinhua) -Shijiazhuang - North China Pharmaceutical Group Corporation (NCPC), one of the largest pharmaceutical manufacturers in China, has entered into a strategic contact with the Institute of Microbiology, Chinese Academy of Sciences (IMCAS) to march into the field of biomass as well as the bio-based chemicals, said local media at the 1st China Bioindustry Convention. Butylalcohol, the biofuel NCPC and the IMCAS focused on, is expected to tart production in August. In September, the biofuel will receive an automobile-oriented testing in the UK, revealed a senior executive of the pharmaceutical giant. Presently, the company has gained several thousand tons orders. The btylalcohol product can be distributed soon provided that the result of concerned testing is satisfactory by then. (6/21/07 Sinocast) -Guodian Power Development Co (GPDC), a publicly listed company, said it will buy a 20 percent stake in Shijiazhuang City Commercial Bank. GPDC, a subsidiary of China Guodian Corporation (CGC), one of the country’s top three power generating firms, will acquire the bank’s 313 million shares for 1.2 yuan apiece. GPDC will become the bank’s largest shareholder with the 375 million yuan capital investment, it said yesterday. The cash injection from the issue of new shares will lift the bank’s capital adequacy ratio to above 10 percent, paving the way for the bank to hold an initial public offering (IPO) on the mainland A-share market in the future. (11/22/07 China Daily) -Chang An Bus, a subsidiary of Chang An Auto Group, reported heartening performances for the first nine months of the year. In Jan-Sept, the company, based in Dingzhou, Hebei province in north China, produced 94,320 vehicles and sold 84,830 of them. Established in end-2002, Chang An Bus is the sole base of Chang An Auto Group to produce mall passenger and export-oriented vehicles. Over the nine months, the company gained overseas orders totaling 6,000 vehicles while its products were marketed to more than a dozen of countries and regions, with both export-oriented production and sales reaching respective historical highs. By end-September, the company realized sales revenue of 2.61 billion yuan and contributed 106 million yuan of tax to the state coffer. (10/29/07, Xinhua) -Hebei Huadan Complete Biodegradation Plastics Company Limited (HHCBP) signed an agreement with Hong Kong Tianhao (Chinese phonetic alphabet) Development Company Ltd. on June 17th, on jointly constructing a new bio-degradation plastics particles project in Yuhua Biology Industry Zone, Shijiazhuang, Hebei province. The facility will produce 150 000 tons of bio-degradation plastics particles per year for shopping bags, one-off dinner bucket, one-off water cups, one-off medical goods and rubbish bags, with a total investment of approximately RMB400 million. Its first phase is scheduled for startup at the end of 2007, with a capacity of 20 000 t/a. (China Chemical Reporter, 7/6/07) -TTCM China, Inc. (TTCH) announced the acquisition of ShiJiaZhuang HuaTeng Technology Company who is engaged in the design and manufacturing of IC-based smart card water-meters as a strategic acquisition related to the water supply industry. The Company is expected to complete the audit and evaluation of the IC-based smart card water-meter company within this month. The acquired company has the annual production capacity of 300,000 units of such high-technology water-meters. (Knobias, 1/22/08) -Shijiazhuang Sanlu Group plans to let its subsidiary, Shijiazhuang Sanlu Group Co., Ltd., offer Chinese yuan-denominated A shares in 2008, the Chinese milk powder maker announced on October 10, 2007. The subsidiary is a joint venture founded by Sanlu Group and New Zealand-based Fonterra Cooperative Group Ltd. in June 2006 and was designed to get listed since its foundation. Fonterra Cooperative Group, the world’s biggest dairy exporter, became the second largest shareholder of the Sanlu Group by acquiring a 43% stake in it with CNY 864 million in June 2006. Situated in the north Chinese province of Hebei, Sanlu Group is devoted to providing dairy products in China. It targets a CNY 10 billion revenue for 2007 and a CNY 30 billion by 2010, and the number was CNY 8.6 billion in 2006, said its chairman Tian Wenhua. (10/16/07, SinoCast)

Real Estate

-The Shijiazhuang Municipal Government recently announced the housing construction and guarantee plan for the period 2008-2010. In the next three years, the City will provide 2,530 low-rent apartments to low-income families with housing problems, and will also construct 123,700 apartments of different types, with 103,600 units of 90sq.m-and-below apartments, accounting for 77% of the total residential floor area. Furthermore, the City will design and construct 33,900 units of affordable housing with floor area of 2.05 million sq.m. (12/13/07, China Industry Daily News)

- Hong Kong contractor Chun Wo Holdings will become a mainland property developer with a two billion yuan investment in Shijiazhuang, the capital of Hebei province. The company, founded in 1968, will be renamed Chun Wo Development Holdings as part of the change. “The mainland will become the company’s major profit contributor over the next few years, especially from the project in Shijiazhuang,” said Dominic Pang Yat-ting, managing director of Chun Wo’s mainland unit, Chun Wo (China). The company is the sole non-mainland property developer in the city. Its residential and retail project, known as Arc De Royal, covers a total gross floor area of 400,000 square metres and accounts for 85 per cent of the company’s land bank. (9/28/07 South China Morning Post)