EMBASSY OF SWITZERLAND


CHINA BUSINESS
BRIEFING (*)

12 February - 18 February 2001

No 34


China-Schindler Elevator Co: From JV to WOFE
China-Schindler Elevator Co., China's first and oldest industrial joint venture, has undergone a major equity change, making it a wholly foreign-owned enterprise. The Chinese partner, Beijing Xinsanwei Science and Trade Co., has cashed out.
Three parties were involved when the joint venture began in 1980: China Construction Machinery Corp., Swiss Schindler Group and Schindler Lifts (Hong Kong) Ltd. The Chinese party held 75% of the shares through investments in fixed assets and inventory produced by elevator plants under the Shanghai Machinery Bureau and the Beijing Machinery Bureau. The Swiss Schindler Group and Schindler Lifts (Hong Kong) Ltd. held 15% and 10% of the shares, respectively. The term of cooperation was 20 years. In 1995 the parties signed another agreement, according to which the foreign party added another RMB 650 million in equity capital. The proportion of shares held by the foreign party consequently rose from 25% to 65%, and the term of cooperation was extended to 50 years.
A detailed withdrawal plan for Xinsanwei has been submitted to the Ministry of Foreign Trade and Economic Cooperation for approval. Specific content of the plan has not been disclosed. China-Schindler has been one of the most successful Sino-foreign joint ventures, whose market share once hit 28%. Since the mid-90s, however, its market share has been declining because of tough competition and disagreements between Chinese and foreign parties. (ChinaOnline, 12 February)

Outsider to fill China securities job
China Securities Regulatory Commission has named Laura Cha, a senior regulator from Hong Kong, to serve as vice chairwoman, highlighting its effort to improve supervision of the country's problem-plagued financial markets. It is the first time that the country has chosen to fill a senior government position with someone from outside the mainland. (Asian Wall Street Journal, 12 February)

Crackdown on financial market leads to drop in share prices
China's crackdown on financial market corruption following the scandal around China Venture Capital has sent traders packing. In sharp contrast to the reform euphoria of last year, when Shanghai B shares led the world's stock markets with a 136% gain, China stocks are among the biggest losers so far this year. The Shanghai B-share index has shed 11.5%. But as domestic punters worry a prolonged investigation will tighten liquidity further, many overseas fund managers cheer China's move to clean up its markets as long overdue. (Reuters, 12 February)

China Consumers Association speaks out against carmaker Mitsubishi
The China Consumers Association Monday urged carmaker Mitsubishi to respect Chinese consumers and follow Chinese laws by repairing faulty brake fluid tubes in two models of sport utility vehicles. It also said Mitsubishi should compensate people for any deaths caused by the defect, to which the carmaker has admitted. (Xinhua, 13 February 13) Earlier on, import licences for the two Mitsubishi models had been withdrawn by the authorities after faulty brakes caused several accidents in Northwest China.

Motor industry grows 7%
The Chinese motor vehicle market grew by 7% in 2000, indicating it is not as strong as world carmakers thought. But some manufacturers did well, and car companies still pin high hopes on China's entry into the WTO. Carmakers are expected to introduce at least 10 new car models in China in the next two years for Chinese families. (SCMP, 13 February)

Private trips abroad up 15.7%
Chinese residents on private trips overseas have increased by 15.7% last year to nearly five million. Among the travellers, 1.77 million were bound to Hong Kong and Macau. (China youth Daily, 13 February)

Canada delegation signs US$3.5B in China deals
A Canadian trade delegation led by Prime Minister Jean Chretien and including more than 400 representatives of Canadian businesses and industries has signed USD 3.5 billion worth of business deals in China. (ChinaOnline, 13 February)

China reports slight increase of foreign trade in January
China reported a slight increase of 1.3% in its foreign trade volume in January, hitting USD 32.46 billion. Total exports of January edged 0.8% to USD 16.92 billion, while imports grew 1.9% to USD 15.54 billion. (Xinhua, 14 February) Authorities point out that the disappointing growth rate of foreign trade is due to the combination of two long holidays in January (New Year and Chinese New Year). So much for the positive impact of "holiday economy".

100 kilometres of new railway lines in Beijing
Beijing will build more than 100 kilometres of railway in the next five years. Currently, Beijing has 54 kilometres of railway in use, and those handle about 500 million person-trips annually or 15% of the city's passengers. (Xinhua, 14 February)

China's share in the IMF rises from 11th to the 8th
The International Monetary Fund has increased China's stake in the IMF from the original 4.6872 billion Special Drawing Rights (USD 6.1 billion) to 6.3692 billion SDR (USD 8.3 billion). China's share in the IMF has risen from the 11th to the 8th after the executive council of the IMF voted for China's special capital increase due to the return of Hong Kong to China. The member countries are entitled to use their stakes to borrow some money from the Fund in face of financial difficulties. (Xinhua, 14 February)

China to spend RMB 15 billion in high-tech development
The Chinese government will invest RMB 15 billion in civil programs of the State High-tech Research and Development Plan in the coming five years. The information industry is on the top of the plan, with information security as its key part, and micro-electronics development will receive unprecedented support from the government. The hi-tech industry will also be used in modernizing the traditional industries such as agriculture and manufacture of Chinese herbal medicines. (Xinhua, 14 February)

China probes huge corruption scandal
China has launched a nationwide crackdown on tax fraud that may rank as the country's biggest corruption scandal since the communist revolution in 1949. Government officials, speaking on condition of anonymity, said the fraud could eclipse the Xiamen smuggling scam uncovered last year that involved about USD 6 billion. The scandal, which involves the issue of fake export certificates that allow exporters to claim tax rebates, appears to have centred around port cities in the southern province of Guangdong. In all, 11 provinces or autonomous regions are being investigated. (Financial Times, 14 February)

Overseas internet connections cut
On February 9, a major undersea fiber optic cable linking China with the United States was cut in the Pacific Ocean near Japan, cutting Internet access to US websites to millions of Internet users in China. China Telecom has refused to take blame or offer compensation to millions of mainland Internet users, but promised, the severed cable would be fixed by February 23. (SCMP, 15 March) Cold comfort indeed. Imagine, one cable cut and millions of Chinese net-users are lost in Cyberspace. Or is this the introduction of the Chinese Intranet?

China to build 5.7 billion square meters of residential housing over next 5 years
According to a top construction official, a total of 5.7 billion square meters of residential housing will be completed in the next five years, including 2.7 billion square meters of urban housing. (ChinaOnline, 14 February)

Germany's Porsche opens Beijing sales outlet
Germany's Porsche AG opened an official sales outlet in Beijing. The company is hoping the new outlet will result in sales of more than 50 of its sports cars by mid-2002. German luxury car manufacturer BMW similarly announced that it plans to increase its sales and service outlets in China from 20 to 35. (ChinaOnline, 15 February) There are also rumors about BMW going into car production in China.

Shanghai to invest RMB 61.3 billion in 25 large projects
Over the next five years, a total of RMB 61.3 billion is expected to be invested in 25 key industrial projects in Shanghai. The investment is a part of the city's effort to become China's largest manufacturing base for information products, automobiles, refined steel products, petrochemical and fine chemical products by 2005. (ChinaOnline, 15 February)

Software exports exempt from taxes
Six government departments have announced their decision to implement a zero-tax policy on software exports. This means that Chinese software products will enter the world market at tax-free prices. In order to boost software exports and channel more products to the world market, other preferential policies in areas such as investment, taxation, industry policy, imports and exports are in store. (ChinaOnline, 15 February)

Wider access to A-share market
Hong Kong-listed H-share firms and other overseas-listed mainland companies will have wider access to the domestic A-share market. The China Securities Regulatory Commission will come up with additional regulations to boost such multi-place listing in order for domestic companies to feed their demand for funds. China has recently relaxed the two-year-ban that banned H-share and B-share companies from issuing A shares. (China Daily, 16 February)

CNOOC launches IPO in Hong Kong
China's third largest oil producer, China National Offshore Oil Company Ltd, kicked off its USD 1.1 to 1.4 billion overseas listing campaign by opening 5% of its initial public offering (IPO) to retail investors in Hong Kong. The remaining 95% of the a total 1.64 billion shares will be offered to international institutional investors. (China Daily, 16 February)

Forecast grim for jobless
China's Ministry of Labor and Social Security has issued a grim assessment of the jobs market for this year, projecting the ranks of registered laid-off city and township workers will remain at more than 6.5 million per month. Competition for employment, meanwhile, is set to increase, as eight million first-time jobs seekers enter the market, joining 14 million workers who have been made redundant during across-the-board firings at state-owned companies in the past five years and have yet to find new jobs. The ministry also estimates there are an additional 150 million rural workers considered surplus to needs. (SCMP, 17 February)


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

19.2.2001

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