EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

14 August - 03 September 2000

No 12


Swiss MATISA SA signs contract with Ministry of Railways
The Ministry of Railways signed a contract with MATISA SA of Switzerland for delivery of a Track Renewal Train. MATISA is a medium size enterprise located near Lausanne and enjoys excellent reputation world-wide for its specialized machines designed and developed for the railway industry. The contract value is above 10 Million Swiss francs. (August 29, Embassy of Switzerland Beijing). 

Zurich Insurance takes 10% share in New China Life
Switzerland's Zurich Insurance has joined Japan's Meiji Life Insurance, the International Finance Corp (IFC) and two other firms to take a combined stake of 24.9% in a Beijing-based life insurance company. New China Life Insurance is the second mainland insurer to win Beijing's approval to sell shares to foreigners - as the Government moves to slowly open up the tightly controlled insurance market before WTO accession. Zurich will own a 10% stake in New China Life Insurance under an agreement signed yesterday in Shanghai. "We believe in the potential of the mainland's insurance industry, and this investment reflects that strategy," said Zurich Insurance spokesman Iris Roth. (South China Morning Post, 1 September)

USD 16 billion to be invested in rail systems
China expects about USD 16 billion to be invested in building subways and other rail systems in the next five years to ease traffic problems in large cities. So far, only a handful of cities have subways, including Beijing, Shanghai and Guangzhou. Beijing is expected to complete an RMB 11.9 billion north-south line in the next five years, while a USD 700 million light rail project in the northern section of the city will be finished by 2005. During the next 20 years Shanghai plans to build 10km of railway each year. (South China Morning Post, 14 August)

New law on investment funds approaching completion
Beijing is expected to pass key legislation governing its investment-funds industry by early next year and to increase by 50% the number of domestic fund-management companies within 18 months. The faster pace of the industry's development is opening up big opportunities for foreign firms. Schroders Investment Management (Hong Kong) believes foreign fund-management groups will be allowed to manage mainland assets in six to nine months through Sino-foreign companies. (South China Morning Post, 14 August)

Coca-Cola aims to double its China business in 5 years
Coca-Cola re-entered the Chinese market in 1979. Over the past 20 years, it has established, with its Chinese partners, 23 bottling plants and 27 production locations. Total investment adds up to more than 1.1 billion US dollars, and local employment reached 15,000. The company is now moving its division office from Hong Kong to Shanghai, as part of its new strategy for the development of its business in China. (Xinhua, 14 August)

TV producers announcing big price cut
China's two largest television producers, Changhong and Konka, are reducing prices of their products, adding fuel to a price-slashing war which is enveloping nearly every industrial sector. In the face of China's cut-throat price competition, many foreign TV producers also joined the price war. (China Daily, 14 August)

PC exports soar to record heights
Computer exports racked up an unprecedented year-on-year growth of 666% in the first half of the year, while imports dropped 8.73% over the same period of last year. China exported 967,900 computer units with total value of USD 384.94 million. Meanwhile, imports dropped to 26,683 units with a total value of USD 44.77 million. A large difference exists between the average value of exported computers (USD 397.71) and imported units (USD 1,677.98). Domestic computer output in the first six months was 2.88 million units, a 105.3% growth compared to last year. (China Daily, 14 August)

Master plan in the making for 'go west' drive
The central Government will announce in October a full set of measures to push ahead the massive "go west" development programme. The policies would cover a wide spectrum of issues including finances, taxation and land provision for relevant projects. The large number of infrastructure projects under construction in these provinces this year cost about RMB 32.6 billion. (South China Morning Post, 15 August)

Second board predicted to be set up in Shenzhen this year
China is currently making the regulations for the second board and will set up the technology-heavy stock market in Shenzhen either late this year or early next year. The second board will mainly be used to give mid- and small-sized enterprises, especially mid- and small-sized technology firms, an opportunity to go public and raise funding, and the restrictions won't be as tight as the stock markets in Shanghai and Shenzhen. (People's Daily, 15 August)

Insurance industry's revenues rise 6.7% in first half
The revenues of China's insurance companies increased steadily in the first half of this year and rose by 6.7% compared with the same period last year. (China Online, 15 August)

Chinese consumer prices rise
According to the National Bureau of Statistics, the average consumer prices for the first seven months of the year was 0.2% higher than the same period last year. Chinese consumer prices rose 0.5% in July over the same month last year. (Xinhua, 16 August)

China utilizes USD 328 billion foreign capital by July
The number of approved foreign-invested ventures in China during the first seven months this year reached 11'981, a rise of 27% over the year-earlier period. To date, overseas investors have set up 353'704 ventures in China, injecting some USD 328 billion of capital. (China Daily, 17 August)

China's money supply surges in July
China's balance of broad money supply (M2) recorded RMB 12.632 trillion by the end of July, up 13.4% compared with the same period last year. The balance of narrow money supply (M1) surged 22.6% from last year to RMB 4.783 trillion. (China Online, 16 August)

ADB approves railway loan to China
The Asian Development Bank approved to provide a USD 300 million loan to China to help the country build a new railway linking the provinces of Anhui, Henan, Hubei and Shaanxi. (China Daily, 18 August)

China's e-business still immature
A new survey shows that the scale of e-commerce in China still lags far behind developed countries, with its on-line trade volume accounting for less than 0.02% of the total retail volume, 70 times lower than that in the United States. At present the major commodities traded through Internet in China are books, disks and computer software and hardware. Telecom products, domestic appliances, on-line education and tickets services are also booming very fast in China. (China Daily, 18 August)

State Council sends chairpersons to boards of supervisors in 100 SOE
China's State Council has designated the first group of 36 chairpersons to the boards of supervisors in 100 key state-owned enterprises (SOE). The move is aimed at strengthening supervision of key state-owned enterprises and prevent the state's assets from being eroded. (China Daily, 18 August)

Private foreign currency deposits exceed USD 65 billion
Although the renminbi is not fully convertible yet, privately held foreign currency deposits amounted to USD 65 billion by the end of July, up 17.6% from a year ago. According to financial analysts, foreign currency deposits are growing because interest rates on most foreign currency accounts are higher than for renminbi accounts. (China Online, 21 August)

China's urban residents spend more in first half
Per capita disposable income of urban residents increased 7.7% in real terms during the first half of 2000. Consumer spending reached RMB 2,433 per person. (China Online, 21 August)

Anti-dumping charges against China's exports on the rise
Anti-dumping lawsuits against products made in China have witnessed a huge increase in recent years. There were 53 anti-dumping cases between last year and the first half of this year, and another 10 cases are being prepared, affecting nearly USD 1.5 billion in Chinese exports. (China Daily, 21 August)

Motorola increases investment by USD 1.9 billion
Motorola announced a USD 1.9 billion investment plan intended to position the company for regional leadership in the semiconductor and cellular phone businesses and make it the largest foreign investor in China. It is by far the largest single foreign-funded project in China, outstripping General Motor's USD 1.6 billion car company in Shanghai. Motorola has seen its accumulated investment in the country reaching USD 3.44 billion.(China Daily, 22 August)

Project to deliver renewable energy
After more than three years of preparation, China is implementing a project designed to turn solar and wind energy into electricity for people living in remote areas. The central government has invested over RMB 20 million to start the project. (China Daily, 21 August)

China to increase tax evasion penalties
Following the loss of considerable amounts of tax revenues, China is turning up the heat on tax evaders and is increasing significantly its minimum fines for this offense. Tax evaders shall pay a fine that is 50 to 500% of the tax avoided. (China Online, 22 August)

Chinese cell phone market soars to world's second largest
China had 59.3 million mobile phone users at the end of June, making it the second-largest market in the world.The figure is up 37% from 43.3 million at the end of last year, meaning China now has more cell phone users than Japan and less only than the United States. China adds about two million cell phone users every month. (China Daily, 24 August)

Fixed asset investments on the rise
China's investment in fixed assets for the first seven months of this year is up 12.6% over the same period last year to a total of RMB 938.3 billion. (China Online, 24 August)

GM gets green light to make compact cars at Pudong plant
General Motors has received permission to begin output of compact family cars at its Pudong factory. It is understood the car will be based on the Opel Corsa, designed by GM's Adam Opel affiliate and sold in 75 countries. The base model is expected to retail for 100,000 yuan. (China Online, 24 August)

China to crack down on foreign-invested enterprises for tax evasion
China's tax authorities announced that during this year's second half, they will increase their investigations into tax evasion by foreign-invested enterprises (FIEs). They will focus their investigations on FIEs that have invested in China for years and reported low profits while continuing to expand their factories. (China Online, 24 August)

China to issue RMB 50 billion long-term government bonds
China's Ministry of Finance is scheduled to issue RMB 50 billion of long-term government bonds in the second half of the year, in a bid to increase fixed assets investment. (China Daily, 25 August)

Foreign firms to take lead in investment in the machinery Industry
Wholly owned foreign companies rather than joint ventures look set to account for most foreign investment in China's machinery industry in the next few years. While these firms made up 40% of foreign investment in the machinery industry until 1998, this proportion is expected to rise after China's entry into the WTO. (China Daily, 26 August)

Nation-wide lottery to fund public health services
People across the PRC will take part in China's first ever nation-wide lottery. It is hoped that between USD 60 and 120 million worth of tickets will be sold during the 4-month trial period. Some 47% of ticket revenue is destined for special welfare funds to support better public health services. This year China formally became an "ageing society" by U.N. standards. About 130 million people, or 10% of the population, are more than 60 years old, comprising the largest and fastest growing group of elderly people in the world. (South China Morning Post, 29 August)

Domestic car manufacturers announce new price cuts
Latest price cuts by Tianjin Xiali and First Automotive Works Volkswagen were aimed at cutting the number of stored cars and expanding market share. The price cuts are good news for mainland consumers eager for mobility, though most of them expect prices to fall still further after the mainland enters the WTO. The domestic car market has seen about 15 price cuts among all brands this year, but the industry remains in the doldrums. (South China Morning Post, 29 August)

Smuggled cellphones account for 38% of sales
During the first half of the year, approximately 5 million cellphones, or 38% of the total bought in the Chinese market, came from illegitimate sources. (ChinaOnline, 30 August)

China's Ministry of Information Industry hands out grants to mobile phone makers
The ministry issued the first RMB 200 million in grants to local manufacturers from a RMB 5 billion fund it set up earlier aiming to end foreign dominance of the mobile phone market. Sales of locally made mobile phones have picked up this year, but foreign products still hold 95% of the market. (South China Morning Post, 31 August)

More than 30% of SOE employees idle
According to the State Economic and Trade Commission, as many as one-third of employees at state-owned enterprises (SOE) are idle. As China's structural adjustments and reforms intensify between 2001 and 2005, large numbers of SOE employees will still need to be let go from their current companies and placed elsewhere. (ChinaOnline, 31 August)

Oil imports nearly double, exports fall 11.7% in first half
China imported 32.14 million tons of crude oil in the first half of 2000, which is more than it imported in the first 10 months of last year. The mainland also spent an average of USD 192 per ton of imported crude oil in the year's first six months, which was 89.3% higher than in the same period of last year and forced China to spend an extra USD 3 billion of its foreign currency reserves for crude oil imports. (ChinaOnline, 31 August)

McDonald's under fire
It has been discovered that toys used in McDonald's promotions worldwide are made in factories in Shenzhen at wages of RMB 1.2 per hour with work days averaging 16 hours. Many of the workers are under-aged children. In Nanjing McDonald's gives away a toy box which says "Made in Mainland China" with the date being "Republic of China Year 88". The government has not yet determined what action to take. (China Watcher, 31 August)

Mainland raises air pollution penalties
Businesses could face fines up to half a million RMB for environmental damage, according to the China's newly-amended Air Pollution Prevention Law. For the first time the law allows the environmental protection authority to confiscate the offenders' ''illegal gains''. The authority will also be able to issue warnings, impose cash penalties and order the temporary closure of businesses. (South China Morning Post, 2 September)

Moftec predicts accession to WTO by year end
The Ministry of Foreign Trade and Economic Co-operation has forecast that China will enter the World Trade Organisation before the end of the year in its annual white paper on China's foreign trade and economic co-operation. (South China Morning Post, 2 September)

National bureau to overhaul data collection to prevent distortion
China's National Bureau of Statistics has embarked upon a major scheme to overhaul the mainland's statistics collection mechanism in order to deflate the exaggerations in the state's statistics. In the past, enterprises submitted their statistics report forms to local governments where the data would be collected and reported to the National Bureau of Statistics. In this way some local governments were able to exaggerate the figures in order to highlight their achievements. (South China Morning Post, 2 September)

ICBC signs agreements to provide online payments
The Industrial and Commercial Bank of China (ICBC) signed agreements with eight Internet service providers in Beijing on Thursday, to jointly launch a business-to-customer online payment system. The launch of the new business marks the ICBC's debut in individual online banking while establishing an integrated online banking system covering corporate and individual financing, as well as B2B and B2C online payment, a spokesman for the ICBC said. (South China Morning Post, 2 September)


China Business Briefing is a random selection of business related news gathered from various media and news services covering China, edited by the Embassy of Switzerland in Beijing and distributed among Swiss Government Offices and other interested parties. The Embassy does not accept responsibility for accuracy of quotes or truthfulness of content. Upon request and depending on the resources available, the Embassy will provide further information on the subjects mentioned in the China Business Briefing.
vertretung@bei.rep.admin.ch 

18.11.2000

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