Ford applies for joint venture
Ford Motor Company filed documents with the Chinese Government seeking approval for its joint venture with the Chang'an Automobile Corp based in Chongqing Municipality. The move has been billed as one of the company's most important investment projects over recent years in a drive to establish itself more in a potentially huge market. General Motors which has already set up business in Shanghai, is competing with Ford for the Chang'an auto project. (China Daily, 18 December)

Thailand unfit for Chinese tourists
Chinese authorities have threatened to drop Thailand from official tourism destinations if the Thai tourism agencies continue to expose the Chinese tourists to ''unhealthy entertainment''. Tourism authorities also urged the Thai authorities to clear their market and clamp down on hidden charges for unwanted souvenirs. (Shanghai Labour News, 18 December) Not really business news, but too good to be missed.

Taiwan eases China bans
Taiwan is to relax controls on trade and investment with the mainland as the two prepare for admission to the WTO. Business ties between Taiwan and the mainland have increased significantly since Taipei eased a travel ban in late 1987. But Taipei still forbids official or direct cross-strait contacts and all civilian exchanges have to be made through third ports, mainly Hong Kong. Trade officials have also promised to widen imports from the mainland. (South China Morning Post, 18 December)

China to lower benchmark for private enterprises to do foreign trade business
Starting from January 1, 2001, former requirements on private enterprises in terms of sales revenue and export quota will be lifted, and the same rules will apply for state-owned, collectively owned and private enterprises and research institutions in granting them rights to do foreign trade business. Sources from the Ministry of Foreign Trade and Economic Cooperation said the move represents another concrete step taken by China to reform its foreign trade system and to prepare for accession to the WTO. (Xinhua, 19 December)

CSRC decision rejected by court
Beijing No 1 Intermediate People's Court has ordered China Securities Regulatory Commission to reopen its assessment of the listing application by a Hainan-based company on grounds that CSRC violated the law by rejecting the application without following proper procedure. This is the first time that China's market regulator has had to defend itself in the court. (Worker's Daily, 19 December)

China becomes world's largest fruit grower
China has become the world's largest fruit growing country, yielding 59 million tons of fruit from 8.4 million hectares of orchards annually, which accounted for 13.4% of the world's total fruit output and 21% of the world's orchard acreage. (Xinhua, 19 December)

Shanghai Stock Exchange marks 10th founding anniversary
Shanghai Stock Exchange, the first of its kind in China since the founding of new China in 1949, marked its 10th anniversary. The number of listed companies in the Shanghai Stock Exchange has increased from eight 10 years ago to 548 at present, and the number of investors from 1.1 million in 1992 to nearly 29 million now. (Xinhua, 20 December)

Sohu fined for copyright infringement
A Beijing court has ordered the internationally known news portal Sohu.com to pay RMB 3'000 to Liu Jingsheng, a translator with China Radio International, for not answering the plaintiff's copyright infringement protest. (China Daily, 20 December)

Carrefour to open 10 more stores in China
French-based global retailer Carrefour plans to open 10 new stores in China by the end of 2001. The company already operates 27 stores including 4 in Beijing and employs 16'000 people nationwide. 95% of Carrefour's merchandise is manufactured in China, which has enabled the company to sell some products at significantly lower prices than its competitors. (ChinaOnline, 20 December)

Most foreign investment is going to "greater Guangdong"
Since 1979 about 85% of cumulative FDI in China has gone to the 11 provinces and provincial-level cities along the eastern coast. So-called "greater Guangdong" (Guangdong, Fujian and Hainan provinces) has attracted about 40% of total investment since 1979, provided largely by Hong Kong and Taiwan manufacturers chasing low labour costs. "Greater Shanghai" (Shanghai, Jiangsu, and Zhejiang provinces) comes second with 25%. "Greater Beijing", including the national capital, as well as Tianjin municipality and Hebei province, brings in about 12% of total FDI each year. Despite government efforts, the share of foreign direct investment taken up by the north-east, central and western provinces combined slipped from 16% in 1997 to less than 14% in the first half of 1999. (EIU, 20 December)

Taiwan's mainland investment up 98% through October
According to statistics released by the Taiwanese government, the approved amount of investment in mainland China in the first 10 months of 2000 exceeded USD 2 billion, up 98% from the same period in 1999. Through 1993, investors from Taiwan had concentrated their investment in southeast costal areas and major cities in China. But recent investment has spread to the central and western regions. Currently, about 95% of Taiwan's businesses have mainland investments. (China News Service, 20 December)

China mulling 18-billion-dollar spending to boost economy
China is mulling an 18 billion-dollar stimulus package for next year in a bid to ensure the improving economy does not lose momentum. Finance Minister Xiang Huaicheng said Beijing would likely issue the same amount of bonds next year as in 2000 - RMB 150 billion. (China Daily, 20 December)

Finance Minister says unexpected deficit no cause for alarm
Though China's financial obligations are greater than expected, Minister of Finance Xiang Huaicheng sees no cause for alarm. He estimated the country's fiscal deficit at RMB 279.8 billion. This is slightly more than the planned RMB 229.9 billion. The minister also reaffirmed the country's proactive fiscal policy to stimulate economic development in the next two years. (ChinaOnline, 21 December)

Guangzhou to build third subway line
The Guangzhou No.3 subway line will begin construction in 2002, and it is expected to be completed and put into service in 2007. It will cost RMB 15.9 billion. (Xinhua, 21 December)

Rheinmetal unit to set up casting plant JV in Shanghai
Kolbenschmidt Pierburg AG, a German supplier of automobile components and a unit of Rheinmetal AG, has inked an agreement with Shanghai Automobile Nonferrous Casting Plant to set up a joint venture in China. The JV will develop, manufacture and sell auto engine components, including oil and water pumps, steering parts and cylinder heads This is Kolbenschmidt's second joint venture in China. (ChinaOnline, 21 December)

Spot check reveals major accounting discrepancies
A spot check of 159 Chinese enterprises revealed that most accounting information does not reflect actual company performance. Companies made false asset reports and that almost all claimed false profits. Tax dodgers reported lower than actual profits, and other companies exaggerated the amount to play up the achievements of enterprise heads, according to ministry data cited in mainland newspapers. (South China Morning Post, 22 December)

Ericsson to invest USD 5.1 billion in China's high-tech
Ericsson has decided to invest USD 5.1 billion in China's high-tech industry over the next five years. Besides, investment in research and development and in human resources will be raised to USD 572 million in 2005. Ericsson, one of the most successful foreign investors in the Chinese market, has already opened 24 offices and 10 joint ventures in China employing over 4,000 local employees. (Xinhua, 24 December)

China's domestic tourism continues to grow
The tourism industry is expected to pull in RMB 450 billion in income by the end of 2000. Domestic tourism is expected to generate RMB 330 billion, up 62.4% from 1999, accounting for more than 73% of total revenue enjoyed by the entire tourism industry. Since 1995, both the revenues and growth rate of domestic tourism have risen against the same figures in foreign tourism. China's three major holidays - Chinese New Year, Labor Day and National Day - have brought in 17% of the estimated revenues for tourism in 2000. (ChinaOnline, 22 December)

China's first homemade sedan ready to hit the road
The first Zhonghua M1 sedan has rolled off the assembly line at the Shenyang Jinbei Passenger Vehicle Manufacturing Co. Developed entirely by Brilliance China Automotive, the Zhonghua M1 is the first automobile to be produced exclusively by Chinese engineering efforts, which took three-years and USD 500 million to create. (ChinaOnline, 22 December)

*     *     *

For those of our readers with a special interest in our activities, we have attached our annual activity report to this issue of the China Business Briefing.

Enclosure

Embassy of Switzerland in Beijing
Economic and Commercial Section
Beijing, 21 December 2000

For the Economic and Commercial Section of the Swiss Embassy in Beijing ("E&C Section") the year 2000 was marked by the Embassy's activities with regard to the 50-year-anniversary of diplomatic relations between Switzerland and China as well as by important changes in our staff. Although these events absorbed a fair share of our energy, I still believe that we succeeded in doing what we are here for, providing valuable services to the Swiss companies active in the Chinese markets. The following is a selection of our activities in the year 2000:

Staff and Organization

After three extremely dynamic years at the head of the E&C Section, Arthur Mattli left Beijing in January and was succeeded by the undersigned. In early June, Annemarie Dubs handed over the secretariat of the Section to Ms Jia Yi. By replacing Ms Dubs with a Chinese employee we created some budgetary flexibility for the Embassy to hire additional staff, albeit not for the E&C Section.
In April, Mrs. Lei Xin became the Executive Secretary of the Swiss-Chinese Chamber of Commerce, Beijing Chapter. For the time being, her office is located within the Embassy of Switzerland, and the E&C Section is supporting the activities of the Chapter in many ways.
With regard our organization, it is my intention to give to each member of the section more responsibility (project ownership) in order to increase motivation and efficiency and to put everybody's best abilities to work. We are improving, but not quite there yet.

Training

Thanks to the generosity of Georg Fischer Piping Systems and the help of Seco and OSEC, we succeeded to send our trade assistant, Ms Zhuang Bo, on a 6-week-training-trip to Switzerland, where she had a chance to discover many facets of the country she is working for. The program was a success and shall be repeated as soon as possible. Especially for our local staff, training must be intensified in the future.

Visits and Official Delegations

Besides an enormous number of company representatives who visited us during the past year, the E&C Section also received some larger delegations, provided briefings on the Chinese economy and helped organizing their schedules (Ex.: A large delegation from the Canton of Valais in April; the President of economie suisse in October; a group of 30 business students in November). Our activities reached a peak in September with the visit of Secretary of State David Syz and his delegation including 12 top ranking business representatives. Finally, we were also marginally involved in the negotiations between Switzerland and China on the latter's accession to WTO.

Trade Disputes

Unavoidably, the E&C Section was called upon to help in a number of legal disputes. Most of them concerned intellectual property rights, breach of contract and disputes between joint venture partners. In cooperation with the legal advisers of the companies and where appropriate we intervened with the relevant Chinese authorities on central or provincial level. However, we couldn't help noticing that some business people seem so overwhelmed by the size of China that they forget the basic rules of caution the moment they cross the border.

Fairs and Exhibitions

The number of business exhibitions and seminars held in Beijing alone is enough to keep you busy all year. We tried to attend at least those which were of particular interest to Swiss exporters or where Swiss companies were participating. The E&C Section took a more active role in the 7th China International Textile Machinery Exhibition (CITME 2000) in October, when we helped OSEC to set-up the Swiss Pavilion and Swissmem to organize a gala reception featuring a fashion show by young Chinese and Swiss designers.

Consulting/Trade inquiries

The year 2000 sets a new record volume in Sino-Swiss trade, with Swiss Exports to China up by more than 35% and imports from China to Switzerland by more than 25% compared to 1999. Many Swiss companies doing business with China had their best year ever. Rest assured, we won't take credit for that, but we are still a little proud. While only a relatively small number of Swiss companies sought advice from the E&C Section, trade inquiries still take an important part of our time. More than a view of those inquiries gave proof of how little known the market conditions in China still are in Switzerland.

With regard to direct investment the E&C Section is rather observer than advisor. A new effort to gather more accurate figures on the size and nature of Swiss direct investment in China produced little evidence, as most companies were unwilling to answer our questionnaire. Currently, Swiss direct investment in China is estimated at around CHF 3.5 to 4 billion, the better part of which stems from a few large companies. In fact, we believe that the number of Swiss companies which have the necessary financial and management resources it takes for a successful investment in China is rather small. On the other hand, after China's accession to WTO, import, distribution and wholesale will become easier and export opportunities will thus improve for small and medium size companies producing in Switzerland.

Publications

In March and September respectively we published the 3rd and 4th edition of the Swiss China Business Directory. Also in September we introduced the latest edition of the Swiss Business Guide China. All of these publications were done in cooperation with OSEC and the Swiss-Chinese Chamber of Commerce. Distribution of the Business Guide was organized by CCPIT (China Council for the Promotion of International Trade).

MODULES FOR SUCCESS is a modular presentation system fostering Switzerland's export industries, initiated and published by OSEC. Thanks to the initiative of our deputy head of section, Erwin Lüthi, and the support of OSEC, a Chinese version of MODULES FOR SUCCESS was produced. The Swiss-Chinese Chamber of Commerce in Zurich added a special module introducing the Chamber and its activities. Meanwhile, the DVD has been distributed among Swiss companies and Chinese authorities including the provincial level.

In June, we introduced the CHINA BUSINESS BRIEFING, a weekly newsletter distributed by e-mail among Swiss government offices and other interested parties. Especially the latter reacted very positively to this new service.

Media

Around 35 Chinese and Swiss journalists attended the first Sino Swiss Trade Relations Media Event in November, co-chaired by the Swiss Ambassador and the President of CCPIT. We shall organize similar events in the future. Our goal is to promote "Swiss Inc." and to provide better access to the Chinese media for small and medium size Swiss companies.

Beyond Beijing

Together with a group of Swiss business people Erwin Lüthi participated in a discovery tour to Xinjiang Ugur Autonomous Region and Gansu province organized by the Ministry of Foreign Trade and Economic Cooperation (MOFTEC) in late March. Myself, I visited Shanghai on two occasions for meetings of the Sino-Swiss Partnership Fund. In August, I attended the opening ceremony of a Swiss company in Chengdu and also met with the local Swiss business community. I was back there in October to participate in the 2000 Western Forum of China.

In spite of dire budgetary constraints, we want to extend our activities for the year 2001 beyond Beijing and help Swiss companies to access other markets in this very large country.