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Court to announce verdict on city's biggest pyramid scheme

A Beijing court will announce verdicts on 28 suspects involved in the city's biggest-ever pyramid selling case Monday morning, the court sources said.

The Yilin Wood Company was accused to have swindled 1.68 billion yuan ($246 million) from investors by promising high returns on sales of woodland.

Original Source: Xin Hua
Source: Law Info China

China Law 0 Comment March 30, 2009, 9:01 am


Mainland exports had their steepest slump on record last month as the global financial crisis cut demand for Chinese goods, but in a sign Beijing's stimulus package is kicking in, capital spending accelerated.
Exports fell 25.7 per cent from February last year, while imports dropped 24.1 per cent, the General Administration of Customs said.

The February data signalled the fourth consecutive monthly decline and the steepest fall since records were first made available in 1993.

The Shanghai share market fell 0.91 per cent yesterday, underperforming regional markets in response to the weaker than expected export figures.

The National Bureau of Statistics said fixed-asset investment in urban areas jumped 26.5 per cent in the first two months from the same period last year to 1.03 trillion yuan (HK$1.17 trillion), outstripping last year's 26.1 per cent rise.

Both exports and capital investment have played a key part in powering the world's fastest-growing key economy.

Premier Wen Jiabao had said the country "must not slacken efforts" to promote exports, despite plunging external demand.

The government estimates more than 20 million migrant workers have lost their jobs because of the closure of thousands of export-oriented factories in the coastal regions.

Investment bank Merrill Lynch said the export numbers were ugly, but fixed investment came in above expectations.

"This illustrates the opposing forces acting on the Chinese economy: contracting global demand but positive policy stimulus," said Timothy Bond and Ting Lu, economists at Merrill. "We expect policy to stabilise growth, and maintain 8 per cent growth for 2009."

Economists said last month's export decline was disappointing because there were more working days than February last year. The Lunar New Year holiday fell in February last year and January this year.

Ben Simpfendorfer, an economist with Royal Bank of Scotland Group, said the biggest shock figure was the fall in the trade surplus, which came in at a three-year low of US$4.84 billion last month, compared with US$39.1 billion in January.

Mr Simpfendorfer said he expected foreign exchange reserves to decline as the trade surplus narrowed, but saw no change in the yuan exchange rate.

According to the statistics bureau, investment in central government projects soared 40.3 per cent to 107 billion yuan from January to February, compared with a 29.6 per cent increase for all of last year.

Investment in local government projects jumped 25.1 per cent to 920.6 billion yuan for the same period, compared with a 25.7 per cent increase for all of 2008.

Sun Mingchun of Nomura International said the strong investment data suggested the impact of the government's 4 trillion yuan stimulus package was being felt. "We expect fixed-asset investment growth to rise further in the months ahead."

Source: South China Morning Post
Cary Huang in Beijing
Mar 12, 2009...

China News 2 Comment March 30, 2009, 8:49 am

Rejecting Coke will not hurt China M&A plans: official

Chinese companies aiming to invest abroad will not face a backlash after Beijing rejected Coca-Cola's bid to buy the country's top juice maker, Huiyuan, China's deputy commerce minister, Chen Jian, said on Friday.

The rejection of Coca-Cola's proposed acquisition comes at a time when Chinese companies are ramping up their foreign acquisition plans, especially in the commodities sector.

Asked whether he was concerned about a backlash, Chen told reporters: "I am not worried."

Other countries "have their own anti-monopoly laws", he said. "They can act according to their laws."

China's commerce ministry rejected the Coke-Huiyan deal under an anti-monopoly law enacted last year, ruling that the combined concentration of the two companies would have hurt competition in the juice business.

The biggest Chinese overseas investment ever, State-owned Chinalco's planned $19.5 billion tie-up with miner Rio Tinto, is under review by the Australian government.

Political opposition to the deal has been mounting in Australia, with the country's Foreign Investment Review Board set to announce its conclusions on June 15.

Chen said that a lengthy review was to be expected, asking rhetorically: "For such a big M&A deal, does a delay of 90 days mean anything important?"

Source: China Daily

China News 0 Comment March 23, 2009, 9:02 am

Britain welcomes Chinese acquisitions, says official

The British Government will welcome Chinese companies that plan to invest in the United Kingdom through acquisitions, a senior government official said in Beijing on Wednesday.

"We have always been open to foreign investment by acquisitions. In this financial difficulty, some British companies will welcome foreign investment to strengthen their capital base," said Alastair Morgan, the UK's director of trade and investment in China.

Morgan made the remarks when commenting on a second Chinese business delegation that left for four European countries last weekend for investment and acquisition opportunities in sectors like automobiles, machinery, textile, food, electronics and technologies related to energy saving and environmental protection.

The delegation, close on the heels of a Chinese trade team that signed $13 billion purchasing deals in late February, is also visiting destinations like Germany, Switzerland, Spain and Britain.

"But Chinese companies need to be careful. If they do not have much exposure to overseas marketing management, it may not be easy to run the large overseas businesses they acquire," Morgan told China Daily.

The UK Trade & Investment (UKTI) on Wednesday launched the UK Advanced Engineering Global Marketing Strategy in Beijing. The program aims to boost Sino-UK commercial collaboration in the area of advanced engineering and highlight the UK's research and development strength. The program, which will run for five years, was simultaneously launched in Beijing, London and Birmingham.

The UKTI will carry out a series of activities in 2009 and 2010 to increase constructive dialogue between Chinese and UK businesses on advanced engineering issues.

Advanced engineering encompasses sectors including aerospace, automotive and advanced materials.

Source: China Daily

China Business 0 Comment March 20, 2009, 9:39 am

Britain welcomes Chinese acquisitions, says official

The British Government will welcome Chinese companies that plan to invest in the United Kingdom through acquisitions, a senior government official said in Beijing on Wednesday.

"We have always been open to foreign investment by acquisitions. In this financial difficulty, some British companies will welcome foreign investment to strengthen their capital base," said Alastair Morgan, the UK's director of trade and investment in China.

Morgan made the remarks when commenting on a second Chinese business delegation that left for four European countries last weekend for investment and acquisition opportunities in sectors like automobiles, machinery, textile, food, electronics and technologies related to energy saving and environmental protection.

The delegation, close on the heels of a Chinese trade team that signed $13 billion purchasing deals in late February, is also visiting destinations like Germany, Switzerland, Spain and Britain.

"But Chinese companies need to be careful. If they do not have much exposure to overseas marketing management, it may not be easy to run the large overseas businesses they acquire," Morgan told China Daily.

The UK Trade & Investment (UKTI) on Wednesday launched the UK Advanced Engineering Global Marketing Strategy in Beijing. The program aims to boost Sino-UK commercial collaboration in the area of advanced engineering and highlight the UK's research and development strength. The program, which will run for five years, was simultaneously launched in Beijing, London and Birmingham.

The UKTI will carry out a series of activities in 2009 and 2010 to increase constructive dialogue between Chinese and UK businesses on advanced engineering issues.

Advanced engineering encompasses sectors including aerospace, automotive and advanced materials.

Source: China Daily

China Business 0 Comment March 20, 2009, 9:39 am

IPR case a wet noodle for Baijia

Chinese characters, with their varieties of frame and font, seem to be a consistent source of trademark infringement conflicts.

Take the recent lawsuit between domestic instant rice noodle makers Baixiang (which means white elephant) and Baijia (which means white home).

The battle began in November 2007. Baijia filed a lawsuit against Baixiang at the Higher People's Court of Henan province, alleging that Baixiang's instant rice noodle products infringed on trademark rights by using Chinese characters similar to Baijia's upright-type trademark, thus affecting Baijia's business.

Baixiang wins

However, after the trial dragged on for a year, the Henan court ruled in favor of the defendant Baixiang and ordered the Baijia company to stop manufacturing and selling its instant rice noodle products with the upright-type of trademark.

Zhenglong Group, as the parent of Baixiang Food Co, established in November 1997, was the owner of the Baixiang trademark. After gaining the right to use an upright-type, regular script of Chinese characters for a trademark in 2001, Baixiang started to manufacture and sell its instant rice noodle products. And until now, the Baixiang product only had a unique upright trademark.

Sichuan Baijia Food Co, established in May 2001, simultaneously sold its instant noodle products with two kinds of trademarks, a horizontal one with boldface characters and an upright one with regular script from the beginning of its business.

In December 2001, the State Administration for Industry and Commerce approved Baijia Co's use of its horizontal trademark.

But without government approval, Baijia has also used the upright trademark since 2001.

After comparing their sales channels, raw materials, eating method, function and targeting of consumers, the court judged the instant rice noodles made by the two companies to be almost the same kind.

According to the court, the two companies were manufacturing the same products - Baixiang was approved to use the trademark right, but Baijia did not gain the right to use the upright-type trademark.

Chen Zhaohui, chairman of Baijia Co, complained that the company's use of the upright trademark was just an effort to seek a more beautiful image.

A manager of Baixiang Co, surnamed Zhang, said the trademark infringement not only results in unfair business competition, but it also confuses customers.

Chen said that by the end of 2008, the Baijia product had a 45 percent share of the domestic instant rice noodle market.

Be careful

However, he added that the current case had been especially significant in reminding the company to be more careful in using trademarks.

"The same as most domestic companies, from the beginning of our business, we did not think much about the intellectual property rights (IPR), especially for our trademark value," Chen said.

Seeking business opportunities from illicitly using Chinese characters similar to a trademark has increased in recent years.

Another recent lawsuit between two domestic pharmacy companies (Tianhe Co from Guilin of Guangxi Zhuang autonomous region, and Tianlin Co from Wuhan of Hubei province) was also due to the same infringing actions - using two similar trademarks with alike Chinese characters.

Experts said the lawsuit between Baijia and Baixiang reflected an increasing awareness of IPR among Chinese companies.

"And thanks to the great efforts, more domestic companies learned to use legal tools in actively protecting themselves on IPR issues," an official from the State Intellectual Property Office pointed out.

Baijia Food, based in western China, had sales exceeding 400 million yuan last year, according to its website (http://www.scbaijia.com).

Shanghai Securities News reported in October last year that Nissin Food Products Co, a leading Japanese maker of instant noodles, was in talks to buy a major stake in Baijia Food. But Baijia makes no comment about it, saying that "we are not going to take the company as son and sell it like a 'pig'," the website said.

The newspaper quoted unnamed sources as saying the talks were focusing on the size of the stake, with Nissin seeking to buy at least 33.4 percent and Baijia Food aiming to sell a smaller stake of between 20 and 25 percent.

Nissin spokesman Katsuhiko Kiyofuji said his company was in talks with the Chinese firm, but he denied reports that it intended to acquire the Sichuan company.

Source: China Daily

China News 0 Comment March 19, 2009, 3:03 pm

China rejects Coke bid to buy major juice maker

BEIJING -- China has rejected Coca-Cola Co.'s $2.3 billion bid to buy a major Chinese juice producer, the Ministry of Commerce (MOC) announced Wednesday.

The purchase of China Huiyuan Juice Group, the nation's largest juice maker, would have been the biggest foreign acquisition of a Chinese company to date.

The proposed purchase was rejected on anti-monopoly grounds, MOC said on its website. "The bid may harm competition...in China's beverage market."

The ruling is the first of its kind since China promulgated its anti-monopoly law last August.

Shares of the Hong Kong-listed Huiyuan were suspended from trade after plunging 20 percent amid speculation Coca-Cola may abandon its bid for the company.

The juice maker's stock last traded 19.4 percent lower at HK$8.3 before being halted early in the session. Coca-Cola Co. was expected to abandon the deal as doubts rose that Chinese regulators would want the beverage giant to relinquish the Huiyuan name, a well-known brand throughout China.

The deal itself is set to expire around March 23 unless granted approval, according to terms set by the two companies. However, they could agree to extend or renew the deal.

Coca-Cola offered on September 3 to buy Huiyuan for HK$17.92 billion (US$2.3 billion) in cash. Rival juice producers have since warned that the acquisition would give Coca-Cola too dominant a position in China's beverage market.

In late September Coca-Cola filed with the MOC for anti-trust approval. According to the anti-monopoly law, mergers or acquisitions must go through an anti-monopoly review if the deal involves a company with a revenue of over 400 million yuan in China or all companies involved have a combined revenue of 10 billion yuan worldwide.

Huiyuan's founders and major shareholders already had endorsed the sale.

Source: China Daily

China Business 0 Comment March 19, 2009, 2:54 pm

Edward E. Lehman again listed in ¡®Who¡¯s Who¡¯

China¡¯s longest-serving director of a private law firm, Edward E. Lehman of Lehman, Lee and Xu, has again been selected for inclusion in the International Who¡¯s Who of Trademark Lawyers and International Who¡¯s Who of Business Lawyers, the result of independent research with clients and peers by the International Bar Association.

It was Mr. Lehman¡¯s fourth consecutive listing in those categories by the prestigious publications.

"I am honored to again be selected by experts and my peers, and to be listed along with such an impressive group of attorneys," said Mr. Lehman, who co-founded the firm in 1992.

In announcing the latest list of Who¡¯s Who, the publication¡¯s Managing Editor Callum Campbell said those included are ¡°the world¡¯s leading practitioners¡± in their respective fields.

Beijing-headquartered Lehman, Lee & Xu has one of the oldest and largest intellectual property practices in China. It also serves as counsel to and advisor for wide range of multinational corporations, associations and governments. Its clients include Fortune 500 companies, non-governmental organizations, embassies and departments of nations, giant domestic enterprises and a scope of other businesses and individuals that mirror China¡¯s remarkable growth over the past 30 years....

China Law 0 Comment March 19, 2009, 11:14 am

Japanese court turns down lawsuit by Chinese laborers

TOKYO--A lawsuit filed against the Japanese government and two Japanese companies by 45 Chinese who were forced to work as laborers in Japan during World War II (WWII) was turned down by the Fukuoka High Court on Monday.

The court said that individual Chinese have no right to demand compensation from Japan as the right was abandoned under the 1972 Japan-China Joint Communique, in which Beijing "renounced its war reparation from Japan."

However, it acknowledged that forcibly taking the Chinese to coal mines in Fukuoka Prefecture and making them work there was an illegal act committed jointly by the state and the companies.

The ruling that individual Chinese have no right to seek war reparations is in line with a Supreme Court decision made in April 2007.

In the lawsuit, the plaintiffs, including relatives of the Chinese who were forced to work as laborers, had demanded that the state, Mitsui Mining Co. and Mitsubishi Materials Corp. pay a combined 1,035 million yen (10.6 million US dollars) in compensation.

In April last year, the high court recommended plaintiffs and defendants reach an out-of-court settlement, but the negotiations broke up partly because the state rejected the suggestion.

In March 2006, the Fukuoka District Court also acknowledged that the act was illegal, but dismissed the lawsuit as the state is not held responsible for the act because public authority was exercised under the Meiji Constitution, which was in effect from 1890 to 1947.

The district court also said that the plaintiffs have lost their right to seek reparation from the companies because 20 years have passed since the time the Chinese suffered forced labor.

Source: China Daily

China Culture 0 Comment March 17, 2009, 11:08 am


We are very pleased that Guo Haina, Wang Xinyu and Yang Chunlei from China University of Political Science and Law (CUPL) have joined Lehman, Lee & Xu as interns. They will work in our Beijing Office for six weeks. All of them are very excited about this new experience.


China News 0 Comment March 16, 2009, 11:41 am


Vice-Premier Wang Qishan yesterday poured cold water on mainland companies' overseas acquisition ambitions amid plunging asset prices worldwide, urging Chinese entrepreneurs to think carefully before embarking on bargain hunting.

Mr Wang's remarks on the issue, the first by a policymaker, have reflected the concerns of the central government over the apparent rush by mainland firms to buy distressed assets offloaded by western banks and companies.

Mainland firms have recently increased overseas mergers and acquisitions, led by a US$19.5 billion investment by Aluminum Corp of China (SEHK: 2600) for a stake in Anglo-Australian mining firm Rio Tinto Group.

Although most of the deals so far have been confined to energy and resources, there have been mounting calls for mainland manufacturers and financial institutions to buy into overseas assets.

The mainland leadership is under increasing pressure at home to diversify its foreign exchange reserves worth almost US$2 trillion, of which more than US$1 trillion has been invested in the low-yield US government securities.

Mr Wang, in charge of economic and financial affairs in the State Council, issued the warning in a group discussion with Hunan deputies to the National People's Congress yesterday.

Xiang Wenbo, the chief executive of one of the mainland's most successful heavy machinery manufacturers, directed his question to Mr Wang and pleaded for more government assistance, including bank credit to finance possible acquisition deals.

"Are you sure of your managerial skills? Have you analysed the corporate culture differences between the two parties? Do you understand how to deal with unions and their relations with management in the country [where your target company is based]?" Mr Wang reeled off a string of questions in an apparent sceptical tone to Mr Xiang of Hunan-based Sany Heavy Industries, according to the China News Service.

"If you don't know your target and yourselves well, your ambition really scares me.

"The success of a company depends on personal connections and the environment. You are successful in Hunan and China but not necessarily so in a foreign country.

"We should be adventurous but, at the same time, we have to be reasonable.

"If you need the money, I will give you the money but you should first study your target company thoroughly before I can tell you my answer."

Chinese enterprises and financial services companies have a poor record in overseas investments.

China Investment Corp, the country's US$200 billion sovereign wealth fund, has been regularly criticised for disastrous investments in Morgan Stanley and Blackstone.

CIC has up to 90 per cent of its overseas portfolio, amounting to US$90 billion, in the form of cash or other highly liquid assets, Jesse Wang Jianxi, its vice-president, said on the sidelines of the annual plenary session of the Chinese People's Political Consultative Conference.

"Asset prices, such as shares in HSBC and Citi look enticing but we can't make purchases simply because of low price," Mr Wang said.

Analysts believed the risk aversion was a response to ferocious public criticism of the heavy losses, although on paper, that the mainland companies incurred on their previous investment moves.

Source: South China Morning Post

Martin Zhou in Beijing, Mar 10, 2009

China News 0 Comment March 13, 2009, 9:54 am

Expert: China should further increase export tax rebates

China should further increase its tax rebates to help exporters in time of the financial crisis, according to an economist with the Development Research Center of the State Council.

Zhang Xiaoji told China Daily on the sidelines of the annual sessions of the Chinese People's Political Consultative Conference (CPPCC) the recent increases of export tax rebates are not enough. They are not as strong as the measures taken by the government during the 1997 Asian financial crisis.

He said the export sector contributed about 20 percent of the total revenue of the country's manufacturing industry and provides 70 million to 80 million jobs. A 10 percent drop in export can reduce up to 10 million jobs.

Xu Xiaolan, another member of the CPPCC, also submitted a proposal for raising tax rebates on all export of manufacturing products.

Source: China Daily

China Law 0 Comment March 12, 2009, 11:38 am

Chinese firms will increase overseas M&A

Chinese companies will increase overseas mergers and acquisitions in the next 12 months as the economic downturn presents opportunities, according to a survey from Royal Bank of Scotland (RBS).

The survey of 106 respondents from China showed 63 percent expected the level of Chinese outbound M&A to increase, with businesses in Asia, North America and Europe identified as the targets.

"Chinese corporations remain eager to expand through global acquisitions. This is part of a continuation of a longer-term trend and for which the current difficult global economic environment presents opportunities," said Michael Bracken, managing director with corporate finance group Asia at RBS.

In terms of deal size, 63 percent of respondents said the bulk of acquisitions would occur within the "mid-market" range, less than $500 million.

Source: China Daily

China Business 0 Comment March 11, 2009, 11:25 am


Zhao C can no longer call himself Zhao C.


The 22-year old man had used "C" as his given name for his entire life, yet when the time came to update his ID card to a second-generation version, the local Public Security Bureau informed him that his name violated the rules. Not only that, their computers were not equipped to handle non-standard characters.

Zhao couldn't believe that a name that had been used on official documents for two decades could suddenly be invalidated, so he took the PSB to court in what was heralded as China's first name-rights lawsuit.

In June 2008, a district court in Yingtan, Jiangxi Province, found in his favor, but the PSB appealed.

Zhao's father Zhao Zhirong, a lawyer, argued on his behalf during the court session yesterday. He brought up a number of other commonly-used letters that do not seem to present any problems for police computers:

A, B, C: Zhao Zhirong pointed out that addresses often contain Latin letters, of the form Section A, Building B, Unit C. This proves that PSB system is able to handle letters.
X: Zhao Zhirong pointed out that his own second-generation ID card contains the letter "X" in the checksum place. The police representative said that X is used to represent the number 10 as a single digit, but it is not part of a name.
CCTV: Zhao Zhirong brought up China's national broadcaster, which has stated several times that it has no intention of changing the abbreviation of its name, despite Ministry of Education rules that could be interpreted to prohibit English and English-language abbreviations in station logos. The police representative recognized Zhao's example, but averred that the station would certainly not have filed its registration papers using the abbreviation "CCTV."
The most interesting part of the case involved a dispute over whether the "C" in Zhao C's name was part of Hanyu Pinyin, the PRC's official Romanization system for Mandarin Chinese, or if it was a foreign language letter:

In court, the Yuehu District PSB argued that the lower court had been mistaken in its factual judgment and application of the law....First, the respondent uses the English letter "C" for his name. In Pinyin, this has a pronunciation similar to c¨ª (´Æ), rather than x¨© (Î÷). Moreover, the respondent did not provide the lower court with evidence that the English letter "C" is part of the national standard for "numbers and symbols" of the People's Republic of China.

Since the pronunciation of the letter was an issue, arguments in court referred to a "left crescent" (×ó°ëÔÂÐÎ), which the Jiangnan City Daily notes was mentioned more than one hundred times. Zhao Zhirong argued that the idea that the "left crescent" is a foreign letter is an outdated historical concept; the PSB did not agree.

After an intense, three-hour session that included the sight of a bailiff fainting against a table, the denouement was fairly anti-climactic: Zhao and the PSB reached a mutual agreement whereby he would voluntarily change his name, and they would waive the paperwork fee. The PSB offered him compensating, which he declined.

Zhao Zhirong told the Information Daily that he and his son don't have any good ideas for a new name, so they're asking the public for suggestions.

Source: Danwei

China Culture 0 Comment March 10, 2009, 9:39 am

Chinese firms seek to invest in Europe

A high-level Chinese business delegation is set to travel to Europe this weekend to explore investment avenues - close on the heels of a trade team which returned to Beijing last weekend.

Officials in the Ministry of Commerce (MOC) said the team will be mainly looking at investment and merger and acquisition (M&A) opportunities in the first mission of its kind to Western Europe.

The most likely targets are companies competitive in manufacturing, clean energy and environmental protection, Beijing-based trade specialists said. Given the market volatility, financial service companies are unlikely to be on the shopping list, they said.

"We will be exploring opportunities for financial participation in European companies," said Commerce Minister Chen Deming, who headed the first trade mission to Europe but, according to MOC sources, is unlikely to lead the second.

Chen made the remarks on Monday after wrapping up his week-long trip to Europe, mainly to import high technologies and advanced equipment.

That trip covered four European countries - Switzerland, Germany, the United Kingdom, and Spain - and resulted in a slew of Chinese orders worth more than $13 billion.

MOC officials would not reveal any specific figure or targets of interest for investment, saying only that in all likelihood, it would take a longer time to allow Chinese businesses to examine a range of options.

Observers said that while the first trade delegation reflects China's rising domestic demand and its determination to keep its markets open amid rising protectionism, the second will show its interest in working with Europe on investment and corporate management.

China's growing M&A appetite, according to Li Jian, a researcher with the Chinese Academy of International Trade and Economic Cooperation, makes sound business sense.

"The global economic crisis allows Chinese companies, with their ample cash reserves, strategic cross-border partnerships with cash-strapped international companies," Li said.

According to a report released yesterday by UK-based The Mergermarket Group, an M&A intelligence service provider, Chinese outbound M&A activities are set to increase this year.

The report said 2009 would be "one of the best years" for buyers in the global M&A arena. Asset prices have declined due to the deepening economic crisis; and in many cases, owners are being forced to sell assets to pay down debts as bank and market financing dry up.

The two primary motivations for Chinese companies considering foreign acquisitions are to expand overseas market share and to acquire technology know-how, according to a survey included in the report.

China is currently looking for productive ways to use its nearly $2 trillion in foreign-exchange reserves to support companies in their overseas development, Fang Shangpu, deputy director of the State Administration of Foreign Exchange, recently said.

In the largest ever overseas investment by a Chinese company, the country's biggest aluminum producer Aluminum Corp of China (Chinalco) will inject $19.5 billion into Rio Tinto Ltd, the London-based miner announced on Feb 12. This will increase Chinalco's stake in the miner to 18 percent, from the 9 percent it held earlier.

However, some analysts also warned of the potential risks in overseas M&A activities. "Chinese firms must be careful with those assets on sale and avoid bringing home 'new burdens'," said Feng Lei, a researcher with the Chinese Academy of Social Sciences.

Source: China Daily

China Business 0 Comment March 9, 2009, 8:30 am


The executive meeting of the State Council reviewed and approved, in principle, the adjustment and stimulus plans for 10 major industries from January 14 to February 25. The industries are automobile, iron and steel, textiles, equipment manufacturing, shipbuilding, electronics and information technology, petrochemicals, light industries, nonferrous metals and logistics.

Why is the Chinese government launching industry rejuvenation plans with such intensity at this time? What is the purpose of these plans? What are the criteria that have been used to select these industries? What are the key points of the industry stimulus plans? What will be the actual effects of the much-anticipated industry plans?

Global financial crisis speeds up introduction of policies

The global financial crisis, triggered in 2008 by the US subprime mortgage crisis, has had a growing impact on today¡¯s China. Overseas demand has dropped dramatically, orders received by Chinese enterprises have decreased visibly and the cash flows of these firms have been on the verge of breakdown. At the same time, hikes in the prices of raw materials, increase in labor costs and inventory have led to a rise in production costs.

As a result, the operating environment of most enterprises has deteriorated, a large number of enterprises in the Pearl River and Yangtze River Deltas have closed down, and there has been a surge in the number of migrant rural workers forced to "return home" or "return home for a second time." The Chinese economy is facing a grim challenge.

Experts believed that the series of stimulus plans introduced by the Chinese government are becoming major engines that will drive the Chinese economy to bounce back.

Why were these ten key industries selected for stimulus plans?

"The selection of these ten key industries was based on two points: the first one is the importance of the industries. These industries have a tremendous impact on economic development since all of them are; important pillar industries in the Chinese economy, main contributors to the value of industry output and government revenue, key channels for employment, and are the main industries driving GDP growth. The second point is that these industries have clear problems. Over the past several years, these industries have all demonstrated problems including excessively rapid expansion of production capacity, oversupply, low-level and redundant construction, irrational product mixes, low-end products with heavy energy consumption and serious pollution. Due to a high reliance on exports, they have all been greatly affected by the global financial crisis." said David Daokui Li, Director of the Center for China in the World Economy (CCWE) at Tsinghua University, in an interview with the People's Daily.

Corresponding policies for the problems presented by these industries have already been formulated as a part of the stimulus plans. The plan for the steel industry, for example, requires that high-energy-consuming and high-polluting production facilities are eliminated, and that projects that simply expand production capacity are not to be approved. The plan for the electronics and information technology industry approves six projects and encourages private capital to enter this sector. This is done in the hope of realizing major breakthroughs in scientific and technological projects.

Industry integration in textiles, iron and steel, equipment manufacturing and automobile enterprises was also encouraged in the stimulus plans.

Focus on long-term development

Some analysts say the plans' primary targets are still to overcome current hardships. The policies of lowering the automobile purchase tax, "automobiles to the countryside," "home appliances to the countryside" and encouraging boat owners to exchange old boats for new ones underscore the new plans to expand domestic demand. The policies supporting the establishment of export bases, increasing export credits and reducing export tax rebates, strengthen the idea of stabilizing China's share of the international market. In addition, the policies provide direct support to textile enterprises by raising the export tax rebate by 1 percentage point to encourage exports and secure 20 million jobs in the textiles industry. Efforts to maintain employment rates and boost people's livelihoods are noticeable.

Li said, "The idea behind the industry plan policies has a certain degree of continuity from the past. They cannot be viewed simply as short-term economic policies hastily enacted to prevent the economy from sliding. The global financial crisis has prompted the Chinese government to accelerate the introduction of industry stimulus plans, but their purpose and significance go beyond just meeting urgent needs."

He further analyzed that the Chinese economy has always been large but not strong for four main reasons. First, China's industries are short of core technology, occupy the low ranks of the industry chain, and have low added value. Second, high-energy consumption causes high pollution, which leads to serious energy waste. Third, serious low-level, redundant construction and surplus production make industries heavily dependent on the international market. Fourth, industry clustering remains low and the industry chain is incomplete.

"From the stimulus plans, we can see the government's high expectation of industry upgrading and structure optimizing. This can be achieved through phasing out backwards productivity, encouraging technical innovation, and merging and integration between enterprises. These efforts can help expand the Chinese economy in size and strength." noted Li.

As these industry stimulus plans were released one after another, related industries and related individual shares have been boosted by the good news and have had an excellent performance. As evident from the fact that the sales volume of automobiles has begun to pick up and prices for iron and steel products have recovered, the initial effects of expanding domestic demand have already surfaced which is remarkable.

Recently, private automobile enterprises announced their intentions of overseas mergers and acquisitions, and the Aluminum Corporation of China (CHINALCO) increased its stake in the Rio Tinto Group. These can all be seen as outcomes of policy guidance.

By People's Daily Online


China Culture 0 Comment March 6, 2009, 11:28 am

Lawmakers approve insurance law

BEIJING -- The Chinese legislature approved last Saturday morning (Feb.28th, 2009) the Insurance Law which mandates the state regulatory body to prevent risky business operations of insurance companies.

The amended law says the State Council's insurance regulatory body has the right to order the insurance company's shareholders to stop affiliate company transactions that seriously harm the company's interests and undermine its solvency.

The regulatory body could restrict rights of insurance company shareholders if they carry out risky capital operations, the law says.

The revised law will take effect on October 1, according to a statement issued by the National People's Congress (NPC) Standing Committee's bimonthly session which ended last Saturday.

Original source: Xinhua
Source: China Daily

China Law 0 Comment March 5, 2009, 10:19 am



BEIJING, March 2 (Xinhua) -- A Chinese man who successfully bid for two looted bronze sculptures auctioned in Paris last week says his winning bid will not be paid.

Cai Mingchao, a collection advisor of National Treasure Funds of China (NTFC), bid 31.49 million euros (39.63 million U.S. dollars) by telephone during the auction at Christie's on Feb. 25,Niu Xianfeng, deputy director of the fund, said at a brief press conference Monday.

"What I want to stress is that this money cannot be paid," Cai said at the press conference.

An unnamed officer with NTFC said Cai successfully registered as an individual bidder on the day of the auction at Christie's because of his good reputation. Usually, bidders are required to register several days before an auction.

"Every Chinese would have liked to do like this at that moment, and I'm honored to have the chance to make the bid," he said.

NTFC was established in 2002 under the administration of China Foundation for the Development of Social Culture registered under the name of the Ministry of Culture for the purpose of repatriating looted Chinese artifacts.

A Xinhua reporter asked if he registered at the auction as a representative of the fund, but Cai only answered, "I did this on behalf of all Chinese people."

"The fund faces great pressure and risks by bidding for the two sculptures, but this is an extraordinary method taken in an extraordinary situation, which successfully stopped the auction," Niu said.

Earlier media reports said the 18th Century bronze heads of a rat and a rabbit were sold for 28 million euros as part of an auction of art works owned by the late French designer Yves Saint Laurent.

China has repeatedly demanded the return of the sculptures looted when the Old Summer Palace (Yuanmingyuan) was burned down by Anglo-French allied forces during the Second Opium War in 1860.However, Christie's held the auction after a court in Paris turned down a motion by Chinese lawyers to stop the auction.

So far, five of the 12 bronze animal heads have been returned, while the whereabouts of five others are unknown.

Wang Qing, spokesman of a group of almost 90 lawyers who have been trying to boycott the auction by legal means, told Xinhua that they were excited to hear the news.

"We admire Cai's action, which demonstrated the power of Chinese people," Wang said. He said Cai was a patriot, who had spent a lot of money in repatriating Chinese cultural relics. He was forced to do this in an effort to stop the auction.

Cai, a native of Fujian, also runs a cultural company in Xiamen city in the province. He bought a bronze buddha statue at a sotheby's auction for 116 million Hong Kong dollars (14.95 million U.S. dollars) in 2006, and brought the rare treasure back to China.

Wang said Cai's action would help the lawyers pursue further legal actions.

Gan Xuejun, general manager of Beijing Huachen Auctions Co. Ltd., said Cai's method of foiling the auction was improper and he sacrificed his reputation as a well-known antiques collector.

"I'm very surprised. Cai's reputation and future career could be ruined. Cai made the choice in an urgent situation for the country, but I personally do not support such behavior," Gan told Xinhua.

"As an experienced artifacts collector and advisor, Cai fully understood all possible consequences and he chose to do what he did after careful consideration," the NTFC officer said.

In China, bidders must pay a deposit before attending an auction. However, a deposit was unnecessary outside China and auctioneers usually accept reliable bidders, said Gan.

Gillian Leung, a public relations manager with Christie's Hong Kong office, said the company was investigating the case, but no official statement was available.

Shan Jing, chief representative of Christie's Beijing office, said usually such a case would be submitted to the company's legal affairs department, and its lawyers would decide on further action.

Gan said Christie's may take legal action to pursue payment from Cai.

Source: Xinhua


China News 0 Comment March 4, 2009, 10:34 am

Insight from McKee of LL&X crucial to franchising forum

Using insight from Matthew McKee, franchising law specialist at Lehman, Lee & Xu, the most recent session of the trade show Franchising and Licensing Asia heard that ¡°China is now the largest franchise market in the world.¡±

The theme of the show titled ¡°Franchising, China and the 2008 Olympics: Is the time right?¡± relied heavily on a report authored by McKee and published in China Law and Practice in June 2008.

¡°The 2008 Olympic Games further expanded this market,¡± McKee noted in his report. ¡°In respect of merchandizing, BOCOG (Beijing Organizing Committee of Games) utilized the franchise model to an unprecedented level. China¡¯s IP laws have been in substantial compliance with international standards for several years now, but enforcement has been a problem. The Olympic Games forced the Chinese government to implement the groundwork for effective IPR protection.¡±

Lehman, Lee & Xu, one of the nation¡¯s top-three law firms, is counsel to the China Chain Store & Franchise Association (CFFA).

The conference held in Singapore also heard a CFFA report noting ¡°franchising in China has grown significantly, particularly in food and nutrition stores, specialty gift shops, Chinese fast-food and casual dining, fitness and beauty services, education and training, renovation, housing intermediaries, car services and hotels.¡±

The report also states that 63 percent of new businesses in 2006 adopted franchising.

Beijing-based McKee said that while numbers cited predate the "current economic storm, franchising in China remains a growing area.¡±

¡°Despite the economic gloom worldwide we are still seeing investors look at the franchise model in China. I envisage that this trend will continue,¡± he said....

China Law 0 Comment March 4, 2009, 10:15 am

Food safety law passed

CHINA¡¯S legislature enacted a tough new food safety law Saturday, promising tougher penalties for makers of tainted products in the wake of scandals that exposed serious flaws in monitoring of the nation¡¯s food supply.

Five years in the making, the law consolidates hundreds of disparate regulations and standards covering China¡¯s 500,000 food processing companies, said Xin Chunying, a vice chairman of the legislative committee of the National People¡¯s Congress Standing Committee.

The law pays special attention to the issue of food additives that lay at the heart of last year¡¯s scandal involving infant formula produced by the Sanlu dairy and other companies. No additives will be allowed unless they can be proven both necessary and safe, according to the law, which goes into effect June 1.

Food safety authorities will also be prevented from issuing inspection exemptions to major food producers, as happened in the tainted milk scandal.

The law also calls for a monitoring and supervision system, a set of national standards on food safety, severe punishment for offenders and a food recall system. It will also create a ¡°high-level coordination and guidance¡± body, Xin said, streamlining food regulation procedures by cutting the number of agencies involved by more than half.

China¡¯s current system of splitting food safety responsibilities among many different agencies has resulted in uneven enforcement and confusion, the U.N. said in a report late last year.

Toughened penalties under the law include fines, cancellation of licenses and punitive damages up to 10 times the value of products implicated. Companies and individuals can also be held liable for medical and other compensation as well as face criminals charges.

Source: Shenzhen Daily

China Culture 0 Comment March 3, 2009, 11:43 am


PARIS, Feb. 25 (Xinhua) -- Two controversial ancient Chinese relics were auctioned off on Wednesday night for 14 million euros (17.92 million U.S. dollars) each by anonymous telephone bidders in Christie's sale of the collection of Yves Saint Laurent and Pierre Berge in the Grand Palace of Paris.

According to Christie's, they have received 8 phone calls for "enquiries" before the sale. After the auction was launched, the competition was only conducted between telephone bidders, with no one in the scene raised for a bid.

Christie's refused to disclose who were the bidders at a press conference afterward.

The bronze sculptures, a rat's head and a rabbit's head, were looted by invading Anglo-French expedition army in the 19th century, when the invaders burned down the royal garden of Yuanmingyuan in Beijing.

Li Huan, a Chinese student in France told Xinhua that the two bronzes are news for the French, but history for the Chinese. Earlier this night, some Chinese students in France voluntarily went to the Grand Palace, distributing sheets introducing the history of Yuanmingyuan and the Second Opium War in 1860.

"They should know more about the history. Although we failed in the lawsuit, justice will not fail," said Li.

The Tribunal de Grande Instance in Paris ruled against stopping the sale of the two bronzes on Monday, and the Association for the protection of Chinese Art in Europe (APACE) was ordered to pay compensation to the defendant.

Ren Xiaohong, a lawyer for APACE, told Xinhua that it was "of great significance" to file the lawsuit. "We hope to arouse public attention in Europe on the fate of numerous Chinese works stolen in the past, to help keep those relics well protected and collected," Ren said.

"My heart sank when the court refused our appeal," said Bernard Gomez, president of APACE, adding that "I hope the bidders are Chinese, I hope the two relics could go home eventually."

Bernard Brizay, French historian and journalist, as well as the author of "1860: the Looting of the Summer Palace" told Xinhua after the two bronzes were sold that he could understand the Chinese feelings towards the two relics. He said, "the two bronzes should be returned to China, no matter who got the bids."

Brizay also scorned on the offer by Pierre Berge, Yves Saint Laurent's partner. He used five "stupid" on Berge's words. "Combining the two relics with human rights and Tibet issues has no difference with blackmailing for ransom," he said.

The Chinese government formally called on Tuesday for the cancellation of the auction of the two bronzes. "The State Administration of Cultural Heritage has formally informed the auctioneer of our strong opposition to the auction, and clearly demanded its cancellation," said Ma Chaoxu, Chinese Foreign Ministry spokesman in a press conference.

"Using the pretext of human rights to infringe on the Chinese people's fundamental cultural rights is just ridiculous," Ma said.

The two bronze sculptures are part of the art collection of the late fashion designer Yves Saint Laurent. So far, five of the 12 bronze animal fountainheads have been returned to China, while the whereabouts of five others are unknown.

Source: Xinhua

China Business 0 Comment March 3, 2009, 11:37 am

'King of the Road' on trial in Shanghai

Highway tycoon Liu Genshan went on trial yesterday at Hangzhou's Shangcheng District People's Court charged with embezzling 150 million yuan ($21.7 million) from a highway company in Zhejiang province.

The former chairman of the Shanghai Maosheng International Group is accused of withdrawing 150 million yuan of the registered capital of the Shaoxing Yongjin Highway Development Co between 2002 and 2004, which also caused a 14 million yuan loss of interest.

He is also charged with acquiring a 30-percent stake in the firm in 2004 for 127 million yuan, when the true price was 433 million yuan.

Liu has been under investigation since 2005, when he was suspected of being involved in corruption in a highway project in Zhejiang. He was arrested on June 5 last year.

Nicknamed King of the Road, the 52-year-old was named in the 2004 Hurun Report as China's 36th richest man with assets totaling 2.1 billion yuan.

The tycoon is believed to have close connections with several senior government officials who helped him win key highway projects.

Cai Jidong, the former director of Shaoxing's traffic department, and Zhang Laixing, vice-director of the department, were said to have helped Liu obtain shares in the Yongjin Highway. Cai has been arrested.

Liu was also a close friend of Chen Liangyu, Shanghai's former party chief who was jailed in April for bribery and abuse of power in the wake of a social security fund scandal.

The court did not announce any verdict yesterday.

Source: China Daily


China Culture 0 Comment March 2, 2009, 11:45 am