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Steel stockpiles fall markedly in China
According to Mysteel on Oct. 19, an industry information provider, the social inventories of five major steel varieties in twenty-six staple markets in China decreased 468,000 tons to 12.706 million tons, suggesting an expanding decline rate since the national holiday.
“It was hard to deliver 100 tons per day several months ago. However, 2,000 tons can also be possible recently,” said Liu Hongye, owner of an steel company in Guangzhou.
Some people are becoming more and more confident about the steel industry because of the surging rise of steel price and sales volume. According to the data on Mysteel until Oct. 11, 88.28% of 145 blast furnaces in Tangshan have been on working.
Some experts express their worries about much severer imbalance between demand and supply due to the blind resumption.
Though the fortunes of 20 industrial clusters and more than 50 upstream and downstream industries are directly associated with the property sector, it is the iron and steel sector that faces the maximum impact. “Even though housing transactions have improved somewhat and some developers have announced new projects in the last two months, there seems to be no immediate sign of
easing the market controls in the near future”, says Zeng Jiesheng, manager and senior researcher at Mysteel Research Institute.
While, Xu Xiangchun, chief information officer at Mysteel, said that the situation might improve in the fourth quarter, as China’s infrastructure projects will help fuel demand for steel, which will in turn drive up prices and enhance profitability.
Comment
The rebound of the property market is limited, and the demand for steel continues to be on the downside. Blind production resumption and rising prices may become major threats to the industry, which push the whole industry into a vicious circle.
US to keep anti-dumping duty on China silicomanganese
The US government determined on Oct. 11 it would maintain the existing anti-dumping duty on silicomanganese from China and Ukraine, despite Beijing’s repeated calls for Washington to drop protectionism, reported by Xinhua on Oct. 12.
The US International Trade Commission, ITC, said in a ruling that revoking the current anti-dumping duty orders on silicomanganese from China and Ukraine would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
Silicomanganese, a ferroalloy with high contents of manganese and silicon, is typically used in the manufacture of stainless steel. With regard to imports of this product from China, it has been the fourth five-year (sunset) review since June 10, 1991 when the duty was first introduced. As a result of ITC’s affirmative determination, the existing orders will remain in force. The duty margin runs at 139.49 percent.
Trade tensions due to US protectionism against China have been simmering throughout the entire election year as both presidential candidates use China as a punching bag.
The Ministry of Commerce of China has repeatedly urged the United States to abide by its commitment against protectionism and work together with China and other members of the international community to maintain a free, open and just international trade environment.
Comment
Trade tensions with China are a particularly sensitive issue as the United States is trying to boost its exports to revitalize a flagging economy and slash the unemployment rate. Fair competitions in the market economy globally are of great significance.
China to control coal production due to shrinking demand
The central government is asking major coal production regions to keep annual coal output growth below 4 percent due to shrinking demand and declining prices, in a move to help the industry become sustainable, a senior official said, reported by China Daily October 12.
The government aims to keep the total coal output under 3.65 billion metric tons with a growth rate of less than 4 percent, said Wu Yin, deputy director of the National Energy Administration at the China International Forum on Coal Industry.
According to figures from local governments, the Inner Mongolia autonomous region produced 680 million tons of coal during the first eight months, 11.5 percent up year-onyear.
Another major coal producer, Shanxi province’s coal output in the first eight months totaled 604 million tons, 7.69 percent up compared with the same period last year.
Wu said that China’s coal output has seen rapid growth since the beginning of the year, but that coal consumption is slowing down and inventories are increasing, which led to huge prices drop in the past three months.
“The coal prices’ fall to a reasonable level is helpful to solve the contradiction between increasing coal demand for power generation and tight coal supply. However, when the prices drop to a severely low level, it will harm both the coal industry and its downstream industries,” he said.
Affected by less coal demand and increasing hydropower generation, China’s coal prices this year have declined from 787 yuan ($123) a ton to 626 yuan a ton with a 20 percent drop from May to August, according to figures from cqcoal.com, a coal information website in China’s major coal trading port Qinghuangdao in Hebei province.
Prices increased a little in September because of growing demand from power plants. However, analysts said that prices may still fall in the fourth quarter because of the macro economy and large coal stockpiles in power plants.
“Coal inventories in power plants are at a high level at present,” said Dai Bing, senior analyst at coal.com.cn, an online coal trading platform. “Major power plants’ coal inventories totaled 84.64 million tons, up 37.2 percent compared with last year.”
Inventories can last for 25 days on average for those power plants, 10 days more than in the same period last year, which will lead to less coal purchases and lower prices, he said.
Although the outlook is not rosy for the coal industry, officials said it is a good chance for companies to diversify coal usage and adjust the production structure.
Wu said the country will continue to see mergers and acquisitions in the coal industry, and the elimination of small-scale coalmines which don’t own advanced technologies or meet safety requirements.
Comment
China imported 185 million tons of coal in the first eight months, up 46.3 percent year-on-year, according to customs data. Increased coal shipments to China create more pressure for domestic stocks. China may continue to see coal supply growth exceed demand for a period of time.
New CNOOC oil fields begin operation
China National Offshore Oil Corp Ltd, China’s largest offshore oil producer, said on October 18 that production has started at two of the company’s newest oil fields in the South China Sea, Xinhua reported.
One of the fields now has four wells in operation with a peak daily output of 3,960 barrels, CNOOC said in a statement.
The other field currently has nine operational wells and is expected to achieve a peak daily output of 5,870 barrels in 2013, the statement said.
The company aims to meet a production target of 330 to 340 million barrels of oil equivalent this year.
Production in the first half totaled 160.9 million barrels, down 4.6 percent year-on-year, according to the company’s semi-annual report.
Comment
China imported 28.97 million tons of refined oil and 200.38 million tons of crude oil in the first nine months this year, according to China Customs. Meanwhile, China invested 151.6 billion yuan in oil and natural gas production from this January to September, an increase of 7.4% year-onyear, State Statistic Bureau says. China’s thirsty for oil will speed up its exploration and production.
China to launch supportive policies for PV industry
Authorities are working to boost the domestic photovoltaic (PV) industry by launching a variety of supportive policies, Xinhua reported, citing a report in the edition of the Shanghai Securities News on Oct. 19.
“Policies will be unveiled when they are mature,” the report said, citing sources from the National Energy Administration(NEA).
“The general goal of the upcoming policies is to expand domestic demand, promote company mergers and encourage industrial innovation,” the report cited the sources as saying.
The NEA said in September that it plans to launch a distributed power generation project that is seen as a measure to boost the domestic PV industry.
The State Grid drew up a proposal on Oct. 18 regarding the conditional exemption of PV grid-connected fees, which will help to break a bottleneck that has trapped China’s PV market, according to Meng Xiangan, vice president of the Chinese Renewable Energy Society.
The NEA is also drafting a subsidy policy for certain areas of the distributed PV grid. The policy would create retails subsidies of 0.4 to 0.6 yuan ($0.06 to 0.09) per kilowatthour, the report said.
The PV industry has been suffering since late last year as a result of slumping demand and declining polysilicon prices. Recent anti-dumping and anti-subsidy investigations from the United States and European countries have also weighed on the industry.
Comment
The PV industry is suffering from internal and external pressure. Supportive policies, including boosting domestic consumption, will be beneficial for the development of the industry.
China launches new census on environmental protection
China on Oct. 16 launched the fourth census on its environmental protection industry in an effort to prepare scientific data for the nation’s policymakers, according to the Ministry of Environmental Protection (MEP), Xinhua reported.
The census will cover the manufacturing and operation of environmental protection products, resource recycling and environmentally friendly products in 2011.
Services related to the environmental protection industry, including the operation of environmental protection facilities and the construction of environment-related projects, will also be included in the census.
In order to get a clear picture of the environmental protection industry, the nation urgently needs this census, Wu Xiaoqing, vice minister of the MEP, said at a launch ceremony on Oct. 16.
The industry’s focus is transitioning from manufacturing to service, said Wu, adding that the market had demanded higher quality and improved delivery capacity in the sector.
Wu said upgrading the industry by linking all its segments through environmental services is a major task for the next step.
The nationwide project is aimed at establishing a lasting, renewable database for the industry and publishing investigative reports.
The census will be jointly carried out by the MEP, the National Bureau of Statistics and the National Development and Reform Commission.
Similar projects were carried out in 1993, 2000 and 2004.
The results of the new census are scheduled to be released in the first half of 2013, according to the MEP.
China’s environmental protection industry has been growing rapidly in recent years. Revenues from the industry’s output topped 1.1 trillion yuan (about $175.6 billion) in 2010, government data showed.
A development program of the sector in the 12th FiveYear Plan (2011-2015) period forecasts the value of the industry’s output will hit 4.5 trillion yuan in 2015.
The value of services related to the sector is forecast to reach 500 billion yuan, according to the program.
Comment
Environmental protection is upgrading in China with the sector moving from manufacturing to service. In the future, services are projected to play a major role in the industry.
China is to be the future of the luxury-apparel market
Bain & Co. released its major annual report on the global luxury goods market on Oct. 15, which pointed out that China, including Hong Kong, Macau and Taiwan, accounted for almost half of all Asian markets, according to Business Insider.
It also indicated that luxury apparel made up 26% of the market share, coming second to the 27% for luxury accessories. Due to the import taxes, 56 percent of Chinese luxury consumption is done overseas, and British media even coins a new word — “Peking Pound” — to describe Chinese huge purchasing power.
“We should find ways to attract the consumption of luxury goods in China. Stimulating domestic demands, reducing trade surplus and meeting the needs of consumers are all major factors to be considered,” said by Chen Deming, the minister of the Ministry of Commerce, according to Chongqing Evening News on Oct. 8.
Apart from the reform in taxes and business models, China is expected to get rid of the label of knockoffs, and cultivate local high-end apparel brands. Many national apparel enterprises have already been on the way to be international.
To attract consumers from the high-end apparel market, Metersbonwe launched a sub-brand named Me & City in 2008. However, the lucrative endorsements of American movie star didn’t prevent it from losing money until 2011.
“What we should learn from the foreign apparel brands is the ability to promote the brand as part of culture and art, not merely methods to control costs and prices,” the chairman of Eve Group, Xia Hua said on Hurun Report Anniversary Celebration on Oct. 19.
What’s more, the combination between e-commerce and luxury apparel has been highlighted in recent years. Many Chinese internet giants like Sina, Tencent and Netease have launched their luxury shopping platforms, and apparel has been one of the fastest-growing categories of online advertising in China.
As China has increasingly sophisticated consumers shifting from overexposed logo brands to absolute quality products, national apparel brands are embracing greater possibilities to be known world widely with cultural added values.
Comment
Famous for customized cheongsams, Rui Fu Xiang has set a good example for national brands in the severe international competition. Improving the brand value is viewed as an effective way to boost the domestic luxuryapparel market, for instance, enhancing customer experience, achieving operational excellence and proposing innovative positioning.
Mexico challenges Chinese textile and clothing support
Mexico has accused China of breaking World Trade Organization rules by giving tax breaks and other favorable deals to its own clothing and textile businesses, Reuters reported on Oct. 15.
Mexico filed a complaint with the WTO saying China was effectively subsidizing Chinese companies in those sectors by exempting them from income taxes, value-added taxes and municipal taxes. Under WTO rules, China has 60 days to resolve the dispute by explaining its actions.
It was Mexico’s fourth WTO complaint against China, a competitor in many sectors including clothing and textiles. It should be noticed that this is the first separate WTO complaint against China from a developing country.
“The growth rate of China’s textile exports is decreasing in recent years, and there is no evidence showing that Chinese textile products cause serious impact on those of Mexico,”one partner of Allbright Law Offices, Fu Donghui said. “Every WTO member has the right to challenge. China should be aware of this tendency in the future and better wield the WTO regulations in the economic exchange.”
Comment
Under the multilateral dispute settlement mechanism, there have already been many cases between developing countries, which is still new for China. Since it is inevitable, it is of great significance to study from this beginning.
Apple to open sixth China store in Beijing
Apple Inc. is expected to open a new store in downtown Beijing, its third in the city and sixth on the Chinese mainland, on Oct. 20, the company said on Oct. 17.
The new store, which will reportedly be the largest Apple store in Asia, will be located on Wangfujing Street, a bustling commercial area.
An Apple spokesman declined to say whether the company will offer the iPhone 5 to the mainland market after the store opens.
Apple’s iPhones and iPads are immensely popular among young Chinese. But with only five authorized Apple stores in the country, copycats have sprung up to meet market demand.
Last year, police in southwest China’s city of Kunming busted 25 stores that were using the company’s logo and selling counterfeit Apple products.
Comment
The popularity of iPhones and iPads among Chinese is increasing. To meet their demands, a new store of Apple in Beijing may be not enough. Other major cities should also be considered.
Online sales boost success of mobile phone companies
The explosive growth of China’s e-commerce industry has led mobile phone sellers, both at home and abroad, to shift their attention to online channels, and analysts say the change may signal a revolution in the mobile phone industry.
Xiaomi Corp, a Beijing-based mobile phone manufacturer that dreams of success like that enjoyed by Apple Inc, has received a lot of attention by selling devices through the Internet since Aug 16, 2011 - the date that Xiaomi introduced its first handset model. Xiaomi is the first major Chinese mobile phone company that has adopted e-commerce channels as its major product distribution platform.
By Aug 16, the company had sold 3.52 million Mi-One devices, the first generation of Xiaomi mobile phones. Seven out of every 10 Mi-One were purchased online, according to the company.
After Xiaomi’s huge success in online marketing, most mobile phone brands in the Chinese market have thronged to the e-commerce market to compete for Web buyers.
Huawei Technologies Co Ltd, the world’s secondlargest telecom equipment maker, which in recent years looked for the terminal business to be its new revenue driver, launched a business-to-customer e-commerce website (www. vmall.com) in March to sell its own consumer electronics, especially smartphones.
In early July, the Shenzhen-based company introduced the 2,499-yuan ($397) Ascend D1, the first Huawei smartphone that can be purchased only online. In addition to Huawei’s Vmall.com, customers can find the product on 360buy.com and Alibaba Group’s Tmall.com as well.
Seeing the great potential of online channels, Huawei even set up an e-commerce business unit this year.
ZTE Corp, the world’s fourth-largest mobile phone vendor by shipments, will earn 300 million yuan ($47.6 million) in revenue from selling mobile phones online this year, up from 10 million yuan last year, said He Shiyou, the company’s executive vice-president.
ZTE started to use e-commerce channels to promote mobile phone sales in 2010, He said.
About 30 million mobile phones are expected to be sold online in China this year, up 68 percent from 2011, according to a report issued by SINO Market Research. The growth rate is more than 10 times that of mobile phones sold in offline outlets during the period, the report estimated.
The online sales will account for 10 percent of total handset purchases this year, up from 2 percent two years ago. It is expected to increase to 15 percent next year, the report said.
Comment
The large number of Internet users in China, coupled with an increasing consumer acceptance of e-commerce, is driving the online sales surge of mobile phones. The online competition is to be more fierce.
Chinese own auto brands experience positive sales growth in Sept
1.62 million vehicles were sold in China in September, jfdaily.com reported on October 17, citing figures from the China Association of Automobile Manufacturers(CAAM). The number is 8.2 percent higher than that of the previous month and 1.8 percent lower than last September. 1.66 million vehicles were manufactured during the month, 10.6 percent higher than last month and 3.7 percent higher than last September.
CAAM analysts attribute the year-on-year sales decline in September to the poor performance of Japanese automobile manufacturers, reported by Gasgoo. Decreasing sales of commercial vehicles was also cited as a key factor.
Total vehicle sales and production numbers for the first nine months of the year totaled 14.09 million units and 14.13 million units. The two figures represented yearon-year growth of 3.4 percent and five percent, respectively.
Passenger automobiles accounted for 1.32 million of all vehicles sold in September and 1.35 million of all those manufactured. Passenger automobile sales slipped 0.3 percent from last September to this September. SUVs were the only vehicle type whose sales experienced positive year-on-year growth.
Commercial vehicle sales in September totaled 301,800 units, increasing 9.2 percent from the previous month but falling 7.6 percent from the previous year. A total of 2.82 million commercial vehicles were sold in the country over the first three quarters of the year.
However, September proved to be a good month for domestic own brand manufacturers, whose passenger automobile sales totaled 561,900 units, growing 26.6 percent from the previous month and 7.5 percent from the previous year. Domestic manufacturers held a 42.7 percent share in the passenger automobile market. Own brand sedans constituted 281,100 of those sales, and made up 30.3 percent of all sedans sold in the country. Own brand manufacturers’ share in the sedan market has increased 6.8 percent from August and 3.2 percent from last September.
A total of 4.57 million own brand passenger automobiles have been sold from January to September, representing year-on-year growth of 2.6 percent. The growth rate is slightly less than the industry average of 4.3 percent. 2.09 million own brand sedans were sold over the nine month period, constituting 26.9 percent of all sedans sold in the country.
By comparison, sales of Japanese branded passenger automobiles fell a full 39.3 percent from September 2011 to September 2012.
Comment
Following a month of Chinese demonstrations protesting the disputed Diaoyu Islands, Japanese brand vehicle sales dropped significantly. Japan’s top three carmakers - Toyota, Honda and Nissan - all produce in China and said they will scale back production in the country following a sales slump sparked by the backlash. FAW Toyota has revised its annual sales target for the year from 50,000 units to 30,000 units. Honda Motor Co Ltd and its China joint ventures sold 33,931 vehicles in the country in September, down 40.5 percent from a year earlier, Reuters reported. IHS Global Insight predicts that Japanese brands will lose about a fifth of the market share through the end of 2012, amounting to about 200,000 units. IHS predicts Japanese automakers could lose another 100,000 in China sales in 2013.
However, the loss of Japanese automakers’ market share in China would benefit European, U.S. and Korean automakers, as well as Chinese domestic auto manufacturers.
China’s State organs to use new-energy autos
A total of 23 electric cars will be used among 11 State organs in a pilot program to promote new-energy vehicles for official use, according to a statement from the Ministry of Science and Technology, or MST, on October 16, China Daily reported.
The 11 departments include the MST, the Government Offices Administration of the State Council, or GOASC, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Culture and the Ministry of Land and Resources, the statement said.
An official with the GOASC said that the office will further enhance the proportion of electric cars in government vehicles in order to boost the development of new-energy automobiles.
According to the statement, China Potevio, a hightech telecommunications manufacturing enterprise, will be in charge of the operation of the electric cars, including car maintenance, charging facility support and business services.
In June, the State Council issued an outline to promote the application of new-energy cars and develop the country’s new-energy automobile industry.
Comment
The Chinese government is speeding the pace of development in the industry.
Ultrabooks ‘are the future’
Ultrabooks will become mainstream in the future and, within two years, about 80 percent of the laptops will have touch screens because of the coming Windows 8 operating system, said Yang Xu, president of Intel China, according to China Daily.
The ultrabook is a concept introduced in 2011 by the semiconductor giant Intel Corp. The concept is to produce a notebook computer designed to provide similar or superior functions as a standard laptop but thinner, lighter and with a longer battery life.
“Last year there were only a few ultrabooks in the global market but this year we will see more than 140 ultrabooks,” said Yang. He said the new type of product will boost sales in the PC industry and many creative models will be produced in the future to redefine the concept of traditional laptops.
The new Microsoft Corp Windows 8 is used by a Chinese PC brand Lenovo IdeaPad Yoga 13.
The world’s and China’s largest PC maker, Lenovo Group Ltd, launched its latest ultrabook in China on Oct 12. The new product is able to swivel its screen 360 degrees, turning a normal laptop into a tablet PC. The company said it will be available on Oct 23 in China starting at 6,999 yuan($1,109).
Comment
The touch-screen ultrabook is the industry trend and will dominate the market in the near future. It is very likely to reclaim territory lost to mobile Internet devices such as tablet PCs and smartphones, especially to Apple Inc’s iPad.
Microsoft eyes hardware, online services as future
Microsoft Corp Chief Executive Steve Ballmer has signaled a new direction for the world’s largest software company, pointing to hardware and online services as its future, taking a page from long-time rival Apple Inc, according to Shanghai Daily.
Ballmer’s comments in his annual letter to shareholders published on October 9 suggested that Microsoft may eventually make its own phones to build on its forthcoming own-brand Surface tablet PC and market-leading Xbox gaming console.
“There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface,” Ballmer wrote.
Ballmer, who took over as CEO from co-founder Bill Gates in 2000, said the company would continue to work with its traditional hardware partners, such as Dell Inc, Samsung and HTC, but he made it clear that Microsoft’s role in the so-called “ecosystem” was changing.
“It impacts how we run the company, how we develop new experiences, and how we take products to market for consumers and businesses,” he wrote.
Microsoft already makes money from providing services online, such as access to servers to enable “cloud com- puting,” or web versions of its Office applications, but Ballmer’s new emphasis suggests an acceleration away from its traditional business model of selling installed software.
“This is a significant shift, both in what we do and how we see ourselves - as a devices and services company,” he added.
Alongside the shareholders’ letter, Microsoft’s annual proxy filing, which deals with the shareholders’meeting and other governance issues, showed that Ballmer, 56, got a lower bonus than he did last year, partly for flat sales of Windows and his failure to ensure the company provided a choice of browser to some European customers.
He earned a bonus of US$620,000 for Microsoft’s 2012 fiscal year, which ended in June, down 9 percent from the year before, according to documents filed with the US Securities and Exchange Commission. His salary, low by US standards for CEOs, was flat at US$685,000.
Comment
Microsoft seeks to copy the success of Apple Inc, whose massively successful iPhone and iPad demonstrated tight integration of high-quality software and hardware and made Windows devices feel clunky in comparison.
Google pushes way into mobile advertising
The US search engine giant Google Inc has been trying to push its way into mobile advertising in China as the country expects to overtake the United States to be the world’s biggest smartphone market this year, according to China Daily report on October 22.
Mobile advertising is one of the few high-key strategies announced by Google China, which, being low-key in itself, shrank its business portfolio in the country in September amid a declining market share.
The company intends to increase its footprint in the mobile advertising sector with its solutions that enable advertisements to be shown on mobile applications, Web pages, mobile search results and online videos.
Advertisement requests in the mobile sector through Google’s products increased by 120 percent from July 2011 to July 2012 in China, and the country has become one of Google’s top five countries by advertising request volume, according to the company.
It’s not known how much mobile advertising contributes to Google’s total revenues. However, Jim Friedland, an analyst with US-based financial services company Cowen Group Inc, estimated earlier this year that mobile advertising accounted for 3 percent of Google’s total revenues in 2010, 7 percent last year, and will almost double to 13 percent in 2012, according to a report by technology website Techcrunch.com.
Comment
As an increasingly large number of people turn to their mobile devices to access the Internet and use mobile applications, it’s possible that the mobile advertisement will help Google to improve its performance in China. However, user experience of mobile advertisement is still not satisfactory and mobile advertising is still weaker than PC advertising in its ability to generate revenues, even in developed Internet markets.
Huawei, ZTE hit back at ‘biased’ US market report
The US congressional report against Huawei and ZTE is based on rumors and aimed at impeding competition from China, according to the companies.
Both Huawei and ZTE claim to have been open and transparent during the year-long investigation and said they were disappointed after the House of Representatives’ intelligence committee warned American companies to avoid buying from them, according to China Daily report on October 11.
The report, unusual in that it is a government action against two individual companies from China in a highly competitive global industry, reflects political anxiety at the rise of Chinese companies operating in the US.
It “employs many rumors and speculation to prove nonexistent accusations”, Huawei, the world’s second-largest network equipment vendor, said in a statement posted on its website.
“We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market.”
David Dai, a spokesman for ZTE, said, “We tried to mitigate the doubts of the US by offering objective third parties to test our credibility during the investigation. We were disappointed with the result, although it did not surprise us.”
Chinese telecommunication companies, including Huawei and ZTE, have gained global market share rapidly in recent years and that has caused “admiration, jealousy, and doubt” in some quarters, said Dai.
Most European countries are far more open to both companies and they have participated in many infrastructure projects there.
Huawei is well established in the UK, where it provides telecommunication equ
According to Mysteel on Oct. 19, an industry information provider, the social inventories of five major steel varieties in twenty-six staple markets in China decreased 468,000 tons to 12.706 million tons, suggesting an expanding decline rate since the national holiday.
“It was hard to deliver 100 tons per day several months ago. However, 2,000 tons can also be possible recently,” said Liu Hongye, owner of an steel company in Guangzhou.
Some people are becoming more and more confident about the steel industry because of the surging rise of steel price and sales volume. According to the data on Mysteel until Oct. 11, 88.28% of 145 blast furnaces in Tangshan have been on working.
Some experts express their worries about much severer imbalance between demand and supply due to the blind resumption.
Though the fortunes of 20 industrial clusters and more than 50 upstream and downstream industries are directly associated with the property sector, it is the iron and steel sector that faces the maximum impact. “Even though housing transactions have improved somewhat and some developers have announced new projects in the last two months, there seems to be no immediate sign of
easing the market controls in the near future”, says Zeng Jiesheng, manager and senior researcher at Mysteel Research Institute.
While, Xu Xiangchun, chief information officer at Mysteel, said that the situation might improve in the fourth quarter, as China’s infrastructure projects will help fuel demand for steel, which will in turn drive up prices and enhance profitability.
Comment
The rebound of the property market is limited, and the demand for steel continues to be on the downside. Blind production resumption and rising prices may become major threats to the industry, which push the whole industry into a vicious circle.
US to keep anti-dumping duty on China silicomanganese
The US government determined on Oct. 11 it would maintain the existing anti-dumping duty on silicomanganese from China and Ukraine, despite Beijing’s repeated calls for Washington to drop protectionism, reported by Xinhua on Oct. 12.
The US International Trade Commission, ITC, said in a ruling that revoking the current anti-dumping duty orders on silicomanganese from China and Ukraine would be likely to lead to continuation or recurrence of material injury within a reasonably foreseeable time.
Silicomanganese, a ferroalloy with high contents of manganese and silicon, is typically used in the manufacture of stainless steel. With regard to imports of this product from China, it has been the fourth five-year (sunset) review since June 10, 1991 when the duty was first introduced. As a result of ITC’s affirmative determination, the existing orders will remain in force. The duty margin runs at 139.49 percent.
Trade tensions due to US protectionism against China have been simmering throughout the entire election year as both presidential candidates use China as a punching bag.
The Ministry of Commerce of China has repeatedly urged the United States to abide by its commitment against protectionism and work together with China and other members of the international community to maintain a free, open and just international trade environment.
Comment
Trade tensions with China are a particularly sensitive issue as the United States is trying to boost its exports to revitalize a flagging economy and slash the unemployment rate. Fair competitions in the market economy globally are of great significance.
China to control coal production due to shrinking demand
The central government is asking major coal production regions to keep annual coal output growth below 4 percent due to shrinking demand and declining prices, in a move to help the industry become sustainable, a senior official said, reported by China Daily October 12.
The government aims to keep the total coal output under 3.65 billion metric tons with a growth rate of less than 4 percent, said Wu Yin, deputy director of the National Energy Administration at the China International Forum on Coal Industry.
According to figures from local governments, the Inner Mongolia autonomous region produced 680 million tons of coal during the first eight months, 11.5 percent up year-onyear.
Another major coal producer, Shanxi province’s coal output in the first eight months totaled 604 million tons, 7.69 percent up compared with the same period last year.
Wu said that China’s coal output has seen rapid growth since the beginning of the year, but that coal consumption is slowing down and inventories are increasing, which led to huge prices drop in the past three months.
“The coal prices’ fall to a reasonable level is helpful to solve the contradiction between increasing coal demand for power generation and tight coal supply. However, when the prices drop to a severely low level, it will harm both the coal industry and its downstream industries,” he said.
Affected by less coal demand and increasing hydropower generation, China’s coal prices this year have declined from 787 yuan ($123) a ton to 626 yuan a ton with a 20 percent drop from May to August, according to figures from cqcoal.com, a coal information website in China’s major coal trading port Qinghuangdao in Hebei province.
Prices increased a little in September because of growing demand from power plants. However, analysts said that prices may still fall in the fourth quarter because of the macro economy and large coal stockpiles in power plants.
“Coal inventories in power plants are at a high level at present,” said Dai Bing, senior analyst at coal.com.cn, an online coal trading platform. “Major power plants’ coal inventories totaled 84.64 million tons, up 37.2 percent compared with last year.”
Inventories can last for 25 days on average for those power plants, 10 days more than in the same period last year, which will lead to less coal purchases and lower prices, he said.
Although the outlook is not rosy for the coal industry, officials said it is a good chance for companies to diversify coal usage and adjust the production structure.
Wu said the country will continue to see mergers and acquisitions in the coal industry, and the elimination of small-scale coalmines which don’t own advanced technologies or meet safety requirements.
Comment
China imported 185 million tons of coal in the first eight months, up 46.3 percent year-on-year, according to customs data. Increased coal shipments to China create more pressure for domestic stocks. China may continue to see coal supply growth exceed demand for a period of time.
New CNOOC oil fields begin operation
China National Offshore Oil Corp Ltd, China’s largest offshore oil producer, said on October 18 that production has started at two of the company’s newest oil fields in the South China Sea, Xinhua reported.
One of the fields now has four wells in operation with a peak daily output of 3,960 barrels, CNOOC said in a statement.
The other field currently has nine operational wells and is expected to achieve a peak daily output of 5,870 barrels in 2013, the statement said.
The company aims to meet a production target of 330 to 340 million barrels of oil equivalent this year.
Production in the first half totaled 160.9 million barrels, down 4.6 percent year-on-year, according to the company’s semi-annual report.
Comment
China imported 28.97 million tons of refined oil and 200.38 million tons of crude oil in the first nine months this year, according to China Customs. Meanwhile, China invested 151.6 billion yuan in oil and natural gas production from this January to September, an increase of 7.4% year-onyear, State Statistic Bureau says. China’s thirsty for oil will speed up its exploration and production.
China to launch supportive policies for PV industry
Authorities are working to boost the domestic photovoltaic (PV) industry by launching a variety of supportive policies, Xinhua reported, citing a report in the edition of the Shanghai Securities News on Oct. 19.
“Policies will be unveiled when they are mature,” the report said, citing sources from the National Energy Administration(NEA).
“The general goal of the upcoming policies is to expand domestic demand, promote company mergers and encourage industrial innovation,” the report cited the sources as saying.
The NEA said in September that it plans to launch a distributed power generation project that is seen as a measure to boost the domestic PV industry.
The State Grid drew up a proposal on Oct. 18 regarding the conditional exemption of PV grid-connected fees, which will help to break a bottleneck that has trapped China’s PV market, according to Meng Xiangan, vice president of the Chinese Renewable Energy Society.
The NEA is also drafting a subsidy policy for certain areas of the distributed PV grid. The policy would create retails subsidies of 0.4 to 0.6 yuan ($0.06 to 0.09) per kilowatthour, the report said.
The PV industry has been suffering since late last year as a result of slumping demand and declining polysilicon prices. Recent anti-dumping and anti-subsidy investigations from the United States and European countries have also weighed on the industry.
Comment
The PV industry is suffering from internal and external pressure. Supportive policies, including boosting domestic consumption, will be beneficial for the development of the industry.
China launches new census on environmental protection
China on Oct. 16 launched the fourth census on its environmental protection industry in an effort to prepare scientific data for the nation’s policymakers, according to the Ministry of Environmental Protection (MEP), Xinhua reported.
The census will cover the manufacturing and operation of environmental protection products, resource recycling and environmentally friendly products in 2011.
Services related to the environmental protection industry, including the operation of environmental protection facilities and the construction of environment-related projects, will also be included in the census.
In order to get a clear picture of the environmental protection industry, the nation urgently needs this census, Wu Xiaoqing, vice minister of the MEP, said at a launch ceremony on Oct. 16.
The industry’s focus is transitioning from manufacturing to service, said Wu, adding that the market had demanded higher quality and improved delivery capacity in the sector.
Wu said upgrading the industry by linking all its segments through environmental services is a major task for the next step.
The nationwide project is aimed at establishing a lasting, renewable database for the industry and publishing investigative reports.
The census will be jointly carried out by the MEP, the National Bureau of Statistics and the National Development and Reform Commission.
Similar projects were carried out in 1993, 2000 and 2004.
The results of the new census are scheduled to be released in the first half of 2013, according to the MEP.
China’s environmental protection industry has been growing rapidly in recent years. Revenues from the industry’s output topped 1.1 trillion yuan (about $175.6 billion) in 2010, government data showed.
A development program of the sector in the 12th FiveYear Plan (2011-2015) period forecasts the value of the industry’s output will hit 4.5 trillion yuan in 2015.
The value of services related to the sector is forecast to reach 500 billion yuan, according to the program.
Comment
Environmental protection is upgrading in China with the sector moving from manufacturing to service. In the future, services are projected to play a major role in the industry.
China is to be the future of the luxury-apparel market
Bain & Co. released its major annual report on the global luxury goods market on Oct. 15, which pointed out that China, including Hong Kong, Macau and Taiwan, accounted for almost half of all Asian markets, according to Business Insider.
It also indicated that luxury apparel made up 26% of the market share, coming second to the 27% for luxury accessories. Due to the import taxes, 56 percent of Chinese luxury consumption is done overseas, and British media even coins a new word — “Peking Pound” — to describe Chinese huge purchasing power.
“We should find ways to attract the consumption of luxury goods in China. Stimulating domestic demands, reducing trade surplus and meeting the needs of consumers are all major factors to be considered,” said by Chen Deming, the minister of the Ministry of Commerce, according to Chongqing Evening News on Oct. 8.
Apart from the reform in taxes and business models, China is expected to get rid of the label of knockoffs, and cultivate local high-end apparel brands. Many national apparel enterprises have already been on the way to be international.
To attract consumers from the high-end apparel market, Metersbonwe launched a sub-brand named Me & City in 2008. However, the lucrative endorsements of American movie star didn’t prevent it from losing money until 2011.
“What we should learn from the foreign apparel brands is the ability to promote the brand as part of culture and art, not merely methods to control costs and prices,” the chairman of Eve Group, Xia Hua said on Hurun Report Anniversary Celebration on Oct. 19.
What’s more, the combination between e-commerce and luxury apparel has been highlighted in recent years. Many Chinese internet giants like Sina, Tencent and Netease have launched their luxury shopping platforms, and apparel has been one of the fastest-growing categories of online advertising in China.
As China has increasingly sophisticated consumers shifting from overexposed logo brands to absolute quality products, national apparel brands are embracing greater possibilities to be known world widely with cultural added values.
Comment
Famous for customized cheongsams, Rui Fu Xiang has set a good example for national brands in the severe international competition. Improving the brand value is viewed as an effective way to boost the domestic luxuryapparel market, for instance, enhancing customer experience, achieving operational excellence and proposing innovative positioning.
Mexico challenges Chinese textile and clothing support
Mexico has accused China of breaking World Trade Organization rules by giving tax breaks and other favorable deals to its own clothing and textile businesses, Reuters reported on Oct. 15.
Mexico filed a complaint with the WTO saying China was effectively subsidizing Chinese companies in those sectors by exempting them from income taxes, value-added taxes and municipal taxes. Under WTO rules, China has 60 days to resolve the dispute by explaining its actions.
It was Mexico’s fourth WTO complaint against China, a competitor in many sectors including clothing and textiles. It should be noticed that this is the first separate WTO complaint against China from a developing country.
“The growth rate of China’s textile exports is decreasing in recent years, and there is no evidence showing that Chinese textile products cause serious impact on those of Mexico,”one partner of Allbright Law Offices, Fu Donghui said. “Every WTO member has the right to challenge. China should be aware of this tendency in the future and better wield the WTO regulations in the economic exchange.”
Comment
Under the multilateral dispute settlement mechanism, there have already been many cases between developing countries, which is still new for China. Since it is inevitable, it is of great significance to study from this beginning.
Apple to open sixth China store in Beijing
Apple Inc. is expected to open a new store in downtown Beijing, its third in the city and sixth on the Chinese mainland, on Oct. 20, the company said on Oct. 17.
The new store, which will reportedly be the largest Apple store in Asia, will be located on Wangfujing Street, a bustling commercial area.
An Apple spokesman declined to say whether the company will offer the iPhone 5 to the mainland market after the store opens.
Apple’s iPhones and iPads are immensely popular among young Chinese. But with only five authorized Apple stores in the country, copycats have sprung up to meet market demand.
Last year, police in southwest China’s city of Kunming busted 25 stores that were using the company’s logo and selling counterfeit Apple products.
Comment
The popularity of iPhones and iPads among Chinese is increasing. To meet their demands, a new store of Apple in Beijing may be not enough. Other major cities should also be considered.
Online sales boost success of mobile phone companies
The explosive growth of China’s e-commerce industry has led mobile phone sellers, both at home and abroad, to shift their attention to online channels, and analysts say the change may signal a revolution in the mobile phone industry.
Xiaomi Corp, a Beijing-based mobile phone manufacturer that dreams of success like that enjoyed by Apple Inc, has received a lot of attention by selling devices through the Internet since Aug 16, 2011 - the date that Xiaomi introduced its first handset model. Xiaomi is the first major Chinese mobile phone company that has adopted e-commerce channels as its major product distribution platform.
By Aug 16, the company had sold 3.52 million Mi-One devices, the first generation of Xiaomi mobile phones. Seven out of every 10 Mi-One were purchased online, according to the company.
After Xiaomi’s huge success in online marketing, most mobile phone brands in the Chinese market have thronged to the e-commerce market to compete for Web buyers.
Huawei Technologies Co Ltd, the world’s secondlargest telecom equipment maker, which in recent years looked for the terminal business to be its new revenue driver, launched a business-to-customer e-commerce website (www. vmall.com) in March to sell its own consumer electronics, especially smartphones.
In early July, the Shenzhen-based company introduced the 2,499-yuan ($397) Ascend D1, the first Huawei smartphone that can be purchased only online. In addition to Huawei’s Vmall.com, customers can find the product on 360buy.com and Alibaba Group’s Tmall.com as well.
Seeing the great potential of online channels, Huawei even set up an e-commerce business unit this year.
ZTE Corp, the world’s fourth-largest mobile phone vendor by shipments, will earn 300 million yuan ($47.6 million) in revenue from selling mobile phones online this year, up from 10 million yuan last year, said He Shiyou, the company’s executive vice-president.
ZTE started to use e-commerce channels to promote mobile phone sales in 2010, He said.
About 30 million mobile phones are expected to be sold online in China this year, up 68 percent from 2011, according to a report issued by SINO Market Research. The growth rate is more than 10 times that of mobile phones sold in offline outlets during the period, the report estimated.
The online sales will account for 10 percent of total handset purchases this year, up from 2 percent two years ago. It is expected to increase to 15 percent next year, the report said.
Comment
The large number of Internet users in China, coupled with an increasing consumer acceptance of e-commerce, is driving the online sales surge of mobile phones. The online competition is to be more fierce.
Chinese own auto brands experience positive sales growth in Sept
1.62 million vehicles were sold in China in September, jfdaily.com reported on October 17, citing figures from the China Association of Automobile Manufacturers(CAAM). The number is 8.2 percent higher than that of the previous month and 1.8 percent lower than last September. 1.66 million vehicles were manufactured during the month, 10.6 percent higher than last month and 3.7 percent higher than last September.
CAAM analysts attribute the year-on-year sales decline in September to the poor performance of Japanese automobile manufacturers, reported by Gasgoo. Decreasing sales of commercial vehicles was also cited as a key factor.
Total vehicle sales and production numbers for the first nine months of the year totaled 14.09 million units and 14.13 million units. The two figures represented yearon-year growth of 3.4 percent and five percent, respectively.
Passenger automobiles accounted for 1.32 million of all vehicles sold in September and 1.35 million of all those manufactured. Passenger automobile sales slipped 0.3 percent from last September to this September. SUVs were the only vehicle type whose sales experienced positive year-on-year growth.
Commercial vehicle sales in September totaled 301,800 units, increasing 9.2 percent from the previous month but falling 7.6 percent from the previous year. A total of 2.82 million commercial vehicles were sold in the country over the first three quarters of the year.
However, September proved to be a good month for domestic own brand manufacturers, whose passenger automobile sales totaled 561,900 units, growing 26.6 percent from the previous month and 7.5 percent from the previous year. Domestic manufacturers held a 42.7 percent share in the passenger automobile market. Own brand sedans constituted 281,100 of those sales, and made up 30.3 percent of all sedans sold in the country. Own brand manufacturers’ share in the sedan market has increased 6.8 percent from August and 3.2 percent from last September.
A total of 4.57 million own brand passenger automobiles have been sold from January to September, representing year-on-year growth of 2.6 percent. The growth rate is slightly less than the industry average of 4.3 percent. 2.09 million own brand sedans were sold over the nine month period, constituting 26.9 percent of all sedans sold in the country.
By comparison, sales of Japanese branded passenger automobiles fell a full 39.3 percent from September 2011 to September 2012.
Comment
Following a month of Chinese demonstrations protesting the disputed Diaoyu Islands, Japanese brand vehicle sales dropped significantly. Japan’s top three carmakers - Toyota, Honda and Nissan - all produce in China and said they will scale back production in the country following a sales slump sparked by the backlash. FAW Toyota has revised its annual sales target for the year from 50,000 units to 30,000 units. Honda Motor Co Ltd and its China joint ventures sold 33,931 vehicles in the country in September, down 40.5 percent from a year earlier, Reuters reported. IHS Global Insight predicts that Japanese brands will lose about a fifth of the market share through the end of 2012, amounting to about 200,000 units. IHS predicts Japanese automakers could lose another 100,000 in China sales in 2013.
However, the loss of Japanese automakers’ market share in China would benefit European, U.S. and Korean automakers, as well as Chinese domestic auto manufacturers.
China’s State organs to use new-energy autos
A total of 23 electric cars will be used among 11 State organs in a pilot program to promote new-energy vehicles for official use, according to a statement from the Ministry of Science and Technology, or MST, on October 16, China Daily reported.
The 11 departments include the MST, the Government Offices Administration of the State Council, or GOASC, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Culture and the Ministry of Land and Resources, the statement said.
An official with the GOASC said that the office will further enhance the proportion of electric cars in government vehicles in order to boost the development of new-energy automobiles.
According to the statement, China Potevio, a hightech telecommunications manufacturing enterprise, will be in charge of the operation of the electric cars, including car maintenance, charging facility support and business services.
In June, the State Council issued an outline to promote the application of new-energy cars and develop the country’s new-energy automobile industry.
Comment
The Chinese government is speeding the pace of development in the industry.
Ultrabooks ‘are the future’
Ultrabooks will become mainstream in the future and, within two years, about 80 percent of the laptops will have touch screens because of the coming Windows 8 operating system, said Yang Xu, president of Intel China, according to China Daily.
The ultrabook is a concept introduced in 2011 by the semiconductor giant Intel Corp. The concept is to produce a notebook computer designed to provide similar or superior functions as a standard laptop but thinner, lighter and with a longer battery life.
“Last year there were only a few ultrabooks in the global market but this year we will see more than 140 ultrabooks,” said Yang. He said the new type of product will boost sales in the PC industry and many creative models will be produced in the future to redefine the concept of traditional laptops.
The new Microsoft Corp Windows 8 is used by a Chinese PC brand Lenovo IdeaPad Yoga 13.
The world’s and China’s largest PC maker, Lenovo Group Ltd, launched its latest ultrabook in China on Oct 12. The new product is able to swivel its screen 360 degrees, turning a normal laptop into a tablet PC. The company said it will be available on Oct 23 in China starting at 6,999 yuan($1,109).
Comment
The touch-screen ultrabook is the industry trend and will dominate the market in the near future. It is very likely to reclaim territory lost to mobile Internet devices such as tablet PCs and smartphones, especially to Apple Inc’s iPad.
Microsoft eyes hardware, online services as future
Microsoft Corp Chief Executive Steve Ballmer has signaled a new direction for the world’s largest software company, pointing to hardware and online services as its future, taking a page from long-time rival Apple Inc, according to Shanghai Daily.
Ballmer’s comments in his annual letter to shareholders published on October 9 suggested that Microsoft may eventually make its own phones to build on its forthcoming own-brand Surface tablet PC and market-leading Xbox gaming console.
“There will be times when we build specific devices for specific purposes, as we have chosen to do with Xbox and the recently announced Microsoft Surface,” Ballmer wrote.
Ballmer, who took over as CEO from co-founder Bill Gates in 2000, said the company would continue to work with its traditional hardware partners, such as Dell Inc, Samsung and HTC, but he made it clear that Microsoft’s role in the so-called “ecosystem” was changing.
“It impacts how we run the company, how we develop new experiences, and how we take products to market for consumers and businesses,” he wrote.
Microsoft already makes money from providing services online, such as access to servers to enable “cloud com- puting,” or web versions of its Office applications, but Ballmer’s new emphasis suggests an acceleration away from its traditional business model of selling installed software.
“This is a significant shift, both in what we do and how we see ourselves - as a devices and services company,” he added.
Alongside the shareholders’ letter, Microsoft’s annual proxy filing, which deals with the shareholders’meeting and other governance issues, showed that Ballmer, 56, got a lower bonus than he did last year, partly for flat sales of Windows and his failure to ensure the company provided a choice of browser to some European customers.
He earned a bonus of US$620,000 for Microsoft’s 2012 fiscal year, which ended in June, down 9 percent from the year before, according to documents filed with the US Securities and Exchange Commission. His salary, low by US standards for CEOs, was flat at US$685,000.
Comment
Microsoft seeks to copy the success of Apple Inc, whose massively successful iPhone and iPad demonstrated tight integration of high-quality software and hardware and made Windows devices feel clunky in comparison.
Google pushes way into mobile advertising
The US search engine giant Google Inc has been trying to push its way into mobile advertising in China as the country expects to overtake the United States to be the world’s biggest smartphone market this year, according to China Daily report on October 22.
Mobile advertising is one of the few high-key strategies announced by Google China, which, being low-key in itself, shrank its business portfolio in the country in September amid a declining market share.
The company intends to increase its footprint in the mobile advertising sector with its solutions that enable advertisements to be shown on mobile applications, Web pages, mobile search results and online videos.
Advertisement requests in the mobile sector through Google’s products increased by 120 percent from July 2011 to July 2012 in China, and the country has become one of Google’s top five countries by advertising request volume, according to the company.
It’s not known how much mobile advertising contributes to Google’s total revenues. However, Jim Friedland, an analyst with US-based financial services company Cowen Group Inc, estimated earlier this year that mobile advertising accounted for 3 percent of Google’s total revenues in 2010, 7 percent last year, and will almost double to 13 percent in 2012, according to a report by technology website Techcrunch.com.
Comment
As an increasingly large number of people turn to their mobile devices to access the Internet and use mobile applications, it’s possible that the mobile advertisement will help Google to improve its performance in China. However, user experience of mobile advertisement is still not satisfactory and mobile advertising is still weaker than PC advertising in its ability to generate revenues, even in developed Internet markets.
Huawei, ZTE hit back at ‘biased’ US market report
The US congressional report against Huawei and ZTE is based on rumors and aimed at impeding competition from China, according to the companies.
Both Huawei and ZTE claim to have been open and transparent during the year-long investigation and said they were disappointed after the House of Representatives’ intelligence committee warned American companies to avoid buying from them, according to China Daily report on October 11.
The report, unusual in that it is a government action against two individual companies from China in a highly competitive global industry, reflects political anxiety at the rise of Chinese companies operating in the US.
It “employs many rumors and speculation to prove nonexistent accusations”, Huawei, the world’s second-largest network equipment vendor, said in a statement posted on its website.
“We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the US market.”
David Dai, a spokesman for ZTE, said, “We tried to mitigate the doubts of the US by offering objective third parties to test our credibility during the investigation. We were disappointed with the result, although it did not surprise us.”
Chinese telecommunication companies, including Huawei and ZTE, have gained global market share rapidly in recent years and that has caused “admiration, jealousy, and doubt” in some quarters, said Dai.
Most European countries are far more open to both companies and they have participated in many infrastructure projects there.
Huawei is well established in the UK, where it provides telecommunication equ