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Business Tianjin Magazine - Business English Magazine in China
China extends Rio probe by two months
Friday, 13 November 2009 16:26
SINGAPORE, Nov 12 (Reuters) - China has extended by two months a commercial espionage investigation into Rio Tinto mining executive Stern Hu, Australian Foreign Minister Stephen Smith said on Thursday.
The arrest of Hu, an Australian, strained ties between Beijing and Canberra. Hu was formally arrested in August along with three Chinese executives from the global miner.
'The Chinese authorities, in accordance with Chinese law, have extended the investigation period for a further two months so that will take the investigation period, as I understand it, to mid-January,' Smith told reporters on the sidelines of an Asia-Pacific meeting in Singapore.
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China and US rule out “trade war”
Written by Xinhua Wednesday, 16 September 2009 16:07
BEIJING, Sep. 16 -- China and the United States have continued to exchange words defending their retaliatory measures in their latest trade row, while offering assurance that neither want to see a trade war.
At a press conference Tuesday, the Ministry of Commerce (MOC) refuted Washington's accusation of violating WTO agreements by flooding the US market, and said China's US-bound tire exports actually declined in the first half of 2009, not disrupting the US market, as Washington had claimed.
The comment came shortly after the Bloomberg news agency yesterday quoted US President Barack Obama as saying, "We have rules on the books," while downplaying the possibility of the two nations beginning a trade war.
MOC spokesman Yao Jian said Obama's decision last week to raise duties on Chinese imported tires is an abuse of special safeguard measures, and "sends a wrong signal to the world amid the financial crisis."
However, Yao downplayed the possibility of the two countries waging a trade war, saying, "We don't want to see individual trade remedy cases hurt bilateral trade and the economic relationship."
China's tire exports to the US rose by 2 percent in 2008, but fell by more than 15 percent in the first half of 2009, according to MOC data.
"The conclusion that China's exports are distorting the US market does not stand," Yao said, insisting that US tire manufacturers did not join the petition, which was brought by the United Steelworkers union.
Some of the largest US tire companies did not take part in the petition for relief from Chinese tire imports. Goodyear, the largest US tire maker, stayed neutral, while Cooper, the second-largest US tire maker, opposed the petition, Bloomberg reported yesterday.
Safeguards can be applied if a surge in imports hurts US manufacturers, and once invoked on a specific product, other countries may follow and implement the same punishment, Bloomberg said.
Yao's comments came after Obama expressed his hope in an interview with Bloomberg Monday, in which he said, "We're not going to see a trade war."
Obama admitted "there are some tensions around this," but defended his stance by saying, "My message is very simple: We have rules on the books."
He argues that the enforcement of the existing trade rules is "to build support among lawmakers and the American public," while Stephanie Lester, vice president of the Retail Industry Leaders Association, which also represents companies such as Wal-Mart and Target, criticized Obama's move as "a bow to political pressure," according to Bloomberg.
When asked what he would say to Chinese President Hu Jintao at the G20 summit next week in Pittsburgh, Obama said, "We've got to establish credibility and enforcement of the rules precisely because I want to further expand trade."
Zhou Shijian, a trade expert and senior counselor of the All China Lawyer Association, asked, "How can they be so unfair?" adding that statistics have shown that China's exports fell last year and did no harm to US industries.
Obama signed through a petition last Friday on imposing duties of 35 percent in the first year, 30 percent in the second and 25 percent in the third year on $1.8 billion worth of automobile tires from China.
Beijing filed a World Trade Organization (WTO) complaint Monday in response. On Sunday, it launched anti-dumping and anti-subsidies investigations into automobile and chicken products from the United States.
A Reuters report speculated yesterday that "the ire in Washington" might derive from the surge of the US trade deficit with China, which totaled $103 billion in the first half of 2009, down 13 percent from last year but still a considerable surge over the last decade.
Limited impact
Shares of Chinese tire makers jumped Tues, after industry comments that the impact of the tariffs would be "limited."
Shanghai-listed Giti Tire told the Global Times that the impact is limited as tires for home-owned cars exported to the US make up only about 10 percent of its total production capacity.
"The high tariffs will certainly hurt the interests of US consumers and sellers, as they can no longer get high-quality, cheap products," Shen Jiawei, executive director of Giti Tire China, told the Global Times.
Doublestar, another tire maker listed on the mainland stock exchange, also told Reuters that direct impact of the US tariffs would be minimal.
"The two countries' restraint shows that both know the bilateral relationship must not be further harmed by a single industry while they have so many common interests," Wan Jun, a researcher into the world economy at the Chinese Academy of Social Sciences, told the Global Times.
RIM signs deal to peddle BlackBerry in China
Tuesday, 08 December 2009 16:26
Research In Motion Ltd. is betting big on the world's biggest cellphone market.
The Canadian smart phone powerhouse has signed a deal with Hong Kong-based IT firm Digital China to distribute BlackBerrys in China.
"Business partnerships are an important aspect of RIM's strategy and Digital China's extensive knowledge and market presence will further expand the opportunity for RIM in China," RIM co-CEO Jim Balsillie said in a statement.
Investors reacted favourably to the announcement, pushing RIM stock up more than 2 per cent yesterday. The company has scheduled another announcement for today to discuss another deal with China Mobile , the country's largest telecommunications network provider.
As more users leave traditional cellphones in favour of more high-tech mobile devices, smart phone makers have set their sights firmly on international markets such as China. However some big-name brands have had difficulty recreating success in the Chinese market. Apple launched its iPhone, a wildly popular device in North America, in China last month. However Apple's Chinese partner reportedly only sold 5,000 sets in the first week, a disappointing debut in the world's biggest mobile phone market.
Apple's iPhone represents perhaps RIM's biggest competition as the Waterloo, Ont.-based firm tries to shift its focus from business and corporate clients to the consumer space. The transition has posed challenges: Whereas RIM once controlled the market for functionality such as "push" e-mail, such services have become more commonplace. In some areas that tend to matter more to consumers than to business or corporate clients - such as the number of third-party applications available for download on each device - the Blackberry line lags far behind the iPhone.
But in China, both Apple and RIM are miles behind firms such as Nokia Corp., which essentially controls the lion's share of the cellphone market. However, Nokia's dominance in the country is predicated on traditional cellphones, rather than the more powerful, more expansive smart phones, according to IDC Canada analyst Kevin Restivo.
"It's still very early days for China's mobile market; it's still primarily comprised of traditional phones, what we would describe as talk-and-text phones," he said. "But like other more developed nations there'll be a conversion to smart phones, especially in 'tier 1' cities such as Beijing and Shanghai."
RIM's international footprint is still relatively small. According to the company's most recent annual report, 80 per cent of its revenue came from Canada, the U.K. and the U.S. The U.S. market alone accounted for 63 per cent of total revenue.
However Mr. Restivo noted that the U.S. market may remain flat next year, whereas China's market is expected to grow about 8 per cent, presenting an opportunity Western smart phone makers simply can't ignore.
"If RIM is to continue to post growth rates that it did in the past, it needs to sustain growth in developing markets," he said.
US asks WTO to rule on China raw materials restrictions
Thursday, 05 November 2009 16:15
WASHINGTON — The United States, joined by the EU and Mexico, asked the World Trade Organization Wednesday to rule on a dispute over Chinese restrictions on raw materials exports, officials said.
The move seeks a formal WTO panel on a complaint filed June 23 alleging China improperly restricts exports to materials to help its own manufacturers.
"We are going to the WTO today to enforce America's rights, so we can provide our country's manufacturers with a fair competitive environment," said Debbie Mesloh, a spokeswoman for the office of the US Trade Representative (USTR).
"We believe the restraints at issue in this dispute significantly distort the international market and provide preferential conditions for Chinese industries that use these raw materials," she added.
"Working together with the European Union and Mexico, we tried to resolve this issue through consultations, but did not succeed. At this point, therefore, we need to move forward with the next step in the WTO dispute settlement process. We remain open to working with China to find a mutually agreeable solution to our concerns."
The materials at issue are: bauxite, coke, fluorspar, magnesium, manganese, silicon metal, silicon carbide, yellow phosphorus, and zinc, key inputs for numerous products in the steel, aluminum and chemical sectors across the globe.
The United States and the 27-nation EU filed the initial complaint at the WTO on June 23, and Mexico joined the consultations on August 21.
The USTR said the European Union and Mexico are joining the United States in requesting the establishment of a WTO dispute settlement panel on the matter.
In filing the complaint, US officials said Chinese actions were part of a "troubling" industrial policy that aims to favor its own manufacturing sector.
According to the complaint, China imposes quotas on exports of some materials and slaps export duties on several raw materials. Other restrictions come in the form of export procedures, including via certain charges that violate global trade rules, according to US officials.
American officials said China's WTO Accession Protocol also contains "broad commitments not to restrict the right to export goods."
The dispute is among several pending in the Geneva-based WTO involving China.
In another case, the WTO's dispute settlement panel in August found that China was breaching international trade rules by blocking foreign-owned companies from acting as importers and wholesalers of films, music and printed material.
The US last year hauled China to the WTO over Beijing's programs to market Chinese-branded goods which Washington charged were based on "protectionist" policy.
China lost an appeal last December against a WTO ruling that its tariffs on car part imports fell foul of global trade rules.
Beijing meanwhile lodged a complaint with the WTO earlier this year over what it claimed were unfair tariffs imposed by Washington on tires.
Profits squeezed in Chinese telecoms
Wednesday, 21 October 2009 15:21
Fierce competition is continuing to squeeze profitability in the Chinese telecoms sector.
China Mobile, the world’s largest mobile operator by subscribers, on Tuesday reported flat net earnings for the third quarter.
The slide in net profits accelerated at China Telecom, its smaller challenger.
China Mobile’s net income for the three months to September 30 increased 2.8 per cent to Rmb28.64bn ($4.19bn), reversing a slight drop in the second quarter but continuing the sharp slowdown in profitability from the first half.
China Telecom saw its third-quarter net earnings slide 48 per cent from a year earlier to Rmb2.39bn, an even steeper drop than in the first half.
The weaker profits come as the country’s three mobile operators are in the middle of a costly roll-out of third-generation networks and a battle over subscribers following a government-prescribed industry shake-up last year.
At the same time, adding new subscribers no longer results in revenue growth as steep as in the past as urban areas are fully penetrated and the operators have to tap rural residents who have less to spend.
“As new users are mainly low-usage customers, and as new tariffs and sales-and-marketing schemes are gradually rolled out, average revenue per user and average revenue per minute of usage showed a decrease, while voice usage volume was stimulated,” China Mobile said.
China Telecom, the country’s largest fixed-line operator, which started mobile services only in the wake of last year’s restructuring, said its profits fell because mobile services are increasingly replacing wireline services.
It also needs to spend more to poach mobile subscribers from China Mobile and China Unicom, its other larger rival.
China Mobile said average revenue per user was Rmb75, down from Rmb83 during the same period last year.
All three mobile operators have seen marketing costs and network investment jump as they build their 3G networks and try to lure high-end customers into switching to 3G contracts.
China Mobile has lined up handset makers to develop the OPhone, a cell phone based on a customised platform using Google’s Android software.
China Unicom, which ranks second among the three operators, will start selling subsidised iPhones to its subscribers on October 30.
China Telecom returned to being the most aggressive among the three operators last month, picking up almost 32 per cent of all new subscribers, up from 26 per cent in August.
In contrast, China Unicom took just 10 per cent of new subscribers in September, in line with the past six months.
China Mobile accounted for 58 per cent of all new subscribers last month, down from 65 per cent a month earlier.
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