Icbccss&p500usd Discussion Threads

[m.t.glass] 02/3/2005 19:58

Next week is China Week on the BBC. A week in which all news and commentary channels will feature in-depth items about and from China, recognizing its huge and growing importance in the world.



Some of the programmes are ones in which audience participation is welcome - via phone, text, email, or in person.


Business, industry and investment will be among the issues covered.

[m.t.glass] 02/3/2005 19:49

Next week is China Week on the BBC. A week in which all news and commentary channels will feature in-depth items about and from China, recognizing its huge and growing importance in the world.



Some of the programmes are ones in which audience participation is welcome - via phone, text, email, or in person.


Business, industry and investment will be among the issues covered.

[maywillow] 28/2/2005 19:33

China boosts global whisky market, but stocks could run out


AFP , BEIJING
Monday, Feb 28, 2005,Page 12

This file picture shows a selection of the many varieties of malt whisky produced in Scotland. Whisky sales in China are rapidly increasing and Scotch exports to the country rose by 137 percent in the first 10 months of last year.
PHOTO: EPA

Good whisky brands typically take 21 years to mature, and almost the same period of time has been needed for the China market to become ripe for Scotland's most famous contribution to world culture.

Visit any trendy bar or karaoke club in Beijing, and chances are you will see a group of 30-somethings, men and women, gathered around a bottle of Scotch.

The ever-more hectic nightlife of China's big cities accounts for huge leaps in sales, according to Geoffrey Kau, a manager at Riche Monde (China) Ltd, which distributes the Johnnie Walker brand in the mainland.

"People mix it with green tea, and they can easily finish a bottle within an hour," he said, sitting next to three cases of freshly-imported Black Label.

One-bottle-an-hour karaoke visitors were a main factor helping Riche Monde to double whisky sales in Beijing to 14,000 cases last year, he said.

Chinese markets also helped boost the global sales volume of Chivas Regal by 12 percent last year, according to the owner of the brand, French wine and spirits giant Pernod Ricard.

"Chivas Regal reported increased sales for all regions, with a spectacular acceleration in Chinese Asia," Pernod Ricard said in a statement earlier this month.

Industry-wide, market analyst Datamonitor estimates China sales last year increased at least 20 percent, possibly twice as much, from 294 million yuan (US$35 million) in 2003.

With growth rates like these, the world's whisky producers feel compelled to pay increasing attention to the Chinese market, even though genuine connoisseurship is infrequent even among sophisticated urbanites.

"They don't really know the taste," Kau said. "They just follow the trend and know it's a popular product to drink."

The lack of Chinese interest in the culture and history of whisky is confirmed by tastings of Irish, Scotch and Bourbon organized by Beijing's John Bull Pub.

"Each time, the people who turn up are 95 percent foreigners, and just one or two Chinese," said Frank Siegel, the pub's owner.

The imported drink of choice for China's nouveaux riches remains cognac, but in the long term it may face a disadvantage, as it is not linked to the youthfulness and energy conjured up by whisky, according to analysts.

"Cognac in China is associated with very old men drinking it in oak-paneled rooms," said John Band, a researcher with Datamonitor, who recently completed a study on China's whisky market.

Retailers in the Chinese capital also recognized the youngish profile of people who drink whisky.

"Locals used to stick to vodka, but we see more of them coming to buy whisky," said Lu Wuji, a manager at Jenny Lou's Shop, a popular retail outlet in Beijing. "They are mostly well-off and in their 30s or 40s."

China is likely to eventually become a much bigger market for imported brands than the other Asian giant, India.

This is because most whisky in the subcontinent is indigenously produced, possibly because of influence from the colonial era.

If China's huge potential were to be fully developed one day, the world's whisky reserves would simply be depleted.

"For China to reach the level of Scotch whisky consumption per head seen in Hong Kong and Taiwan, they would need to buy far more Scotch than can conceivably be produced," Datamonitor's Band said.

All the major distillers should be looking at China, even if they may have to wait for a quarter century to see the market boom in a big way, observers said.

"In 25 years, when the people who are currently moving from poor to middle income move to high income, that's when Scotch is really going to take off," Band said.

But perhaps only about five or six companies with a sufficient global infrastructure will be able take full advantage of the Chinese market, he said.

Size and diversity makes it unlike any other country, and many prefer to consider it a continent on a par with, say, Europe.

[ariane] 27/2/2005 10:00

Gordon Brown in China



--------------------------------------------------------------------------------
Why Mr Brown went to China

The Chancellor lobbied for Rover, and promoted British innovation and education, but Heather Stewart detects a hint of electioneering

Sunday February 27, 2005
The Observer

Shanghai might have been an odd place for Gordon Brown to work on the contents of his red box, but last week's whistle-stop tour of the Chinese economy was part of a choreographed build-up to the Chancellor's pre-election Budget next month.
For Brown, setting out what he calls the 'China challenge' is a way of impressing on the electorate that he doesn't take Britain's economic success for granted - though talking about the rise of the Asian giants is also a useful way of distracting attention from the short-term problems of tight public finances, and the looming possibility of tax increases.

Whatever Brown's political motivations, he is right that China's extraordinary growth has already altered the landscape of the global economy dramatically. Since it joined the World Trade Organisation in late 2001, its exports have exploded: as Brown said last week, China already makes half the world's cameras, a quarter of the world's washing machines and 90 per cent of its toys. The EU Trade Commissioner, Peter Mandelson, was in China last week too, calling for Beijing to restrict its textile exports to avoid flooding the global market and damaging producers struggling to cope with the abolition of tariffs on textiles in January.

China is also sucking in an increasing proportion of the world's resources. Last year's oil price spike was largely driven by the unanticipated explosion in demand from China, which was guzzling 1 million more barrels a day than in 2003.

'To give you an idea of the scale of it, in March last year, 1,000 cars a day were being registered in Beijing,' says Kevin Norrish, commodities analyst at Barclays. He believes China's extraordinary appetite for resources is far from sated. 'The potential for growth is enormous: China's moving up the development curve, and that's likely to continue for some time.'

So how should Britain square up to a nation of 1.3 billion people, where man ufacturing workers earn 4 per cent of what their British counterparts are paid?

Not surprisingly, the response of many firms is that they don't have a hope. When the Engineering Employers Federation asked its members last year how they viewed China, almost 60 per cent said they saw it as a threat, and only a fifth as an opportunity.

EEF economist Lee Hopley says British companies have often caught on to the idea that they can cut their manufacturing costs by shifting factories to China but haven't realised it's also a vast and rapidly expanding market.

'UK companies are still focusing quite strongly on developed countries, which is surprising given that the economies of the European Union, for example, are forecast to grow much more slowly than India and China,' she says.

Britain is currently the 14th largest exporter to China, while France is the 12th and Germany the fourth.

Ian Cheshire, who runs the international operations of Kingfisher, which has a chain of successful B&Q stores in China, says the rewards of cracking the tricky market can be enormous. 'Yes, there are 1.3 billion people, but it's probably more interesting that there are 300 million mobile-phone users,' he says. B&Q in China caters for the burgeoning middle class, fitting out entire apartments.

Brown wants more firms to follow Kingfisher's lead. He has set a target of doubling Britain's exports to China by 2007, and quadrupling them by 2010.

If that is to happen, he believes we need a familiar Brownite mix of higher skill levels, innovation and entrepreneurialism: themes we can expect to hear a lot about in the Budget. Competing on price for low-tech goods will be impossible in a world where low-cost labour from China, India and Eastern Europe is available, the argument goes, so Britain will have to move toward higher margin, more sophisticated products. Research and development, and having a skilled workforce will become a crucial competitive advantage.

'We've got to drive toward getting everyone's skill levels up,' says Digby Jones, president of the CBI, who has been to China to see for himself. 'If you're trying to compete only on price, you will fail, and you will go bust and China will have your lunch. If you move into innovation, and high value-added [products], you have nothing to worry about. Britain has got a tremendous future.'

He believes this process will continue, as China's economic development spreads from the rich eastern seaboard into the rural west, where there is a pool of up to 150m unemployed workers.

'You skill a bit more, invest a bit more, get some better kit; and then in five years time, that will have gone to China, and you'll have to do it all over again. You're going to see a complete restructuring of the industrial economies of the US, France, Germany and the UK.'

This diagnosis is the same one Brown has been making since 1997. Having handed interest-rate setting over to the Bank of England, he has increasingly busied himself with policy areas that are not traditionally the job of a Chancellor, but which he believes are critical to preparing Britain for the future: education and training; and science and technology.

'In the globalisation game, we see Britain's comparative advantage as our stability, our scientific genius, our world class universities and our global connections,' he said in a speech.

Hopley says those manufacturers that have succeeded in exploiting the opportunities offered by China have often done so by pursuing the strategy Brown advocates - sending their low-end manufacturing offshore, and keeping hi-tech innovation in-house, in Britain.

Brown singled out two areas last week in which he said 'Global Britain' could make progress in the Chinese market: financial services and education. With thousands of Chinese pupils already in schools and universities across the country, the Treasury hopes to exploit the fact that English is a global language. Jones adds three more: pharmaceuticals, aerospace, and car-making.

Many of the concrete plans announced by the Treasury on last week's trip - none of which involved spending much new cash - were about education, including swap arrangements allowing Chinese students to stay and work for a year in Britain after completing a degree here, and vice versa.

In financial services, Brown said he would set up links between venture capitalists in the two countries; offer training for Chinese financial professionals and encourage more Chinese firms to list in London. 'We are already taking our skills and knowledge to the rest of the world and the rest of the world is coming to us.

As he was talking about his plans to secure Britain's future in the rapidly-changing global economy, though, Brown was scrambling to pull off a rescue deal for Rover, with a slug of government help if necessary: a reminder, if one were needed, that 'Global Britain' isn't quite ready to stand on its own two feet.

[ariane] 17/2/2005 15:42

LONDON, February 17 (newratings.com) – Analyst Theo Kitz of Merck Finck & Co maintains his "buy" rating on Solarworld (ticker: SWV), while raising his estimates for the company. The target price has been raised from €90 to €100.

In a research note published this morning, the analysts mention that the company has raised its share capital by 10%. The earnings dilution from the capital raise would be more than offset by the benefits from Solarworld's recent license agreement with Suntech Power in China, the analyst says. The company would invest the proceeds from the recent capital raise in capacity expansion initiatives, Merck Finck & Co adds. The EPS estimates for 2005 and 2006 have been raised from €3.14 to €3.34 and from €4.28 to €4.71, respectively.

[grupo guitarlumber] 17/2/2005 12:32

Chinese wine tempts Italy's Illva

Demand for wine in China is said to be rising
Italy's Illva Saronno has agreed to buy 33% of Changyu, the largest wine maker in China.
Changyu said in a statement to the Shenzhen stock exchange that Illva will pay 481.42m yuan ($58.16m; £30.7m), once the government approves the deal.

The Italian liqueur maker will acquire the shares from the Yantai State Asset Management Bureau.

Chinese wine sales are growing, the US Agriculture Department said, with wine sales in 2003 up 25% at 61.1bn yuan.

State impulse

China is encouraging state-owned companies to sell shares to foreign investors.

Anheuser-Busch, Heineken and Scottish & Newcastle have all invested in the Chinese beer industry in the last two years and now Illva Saronno is betting on the Chinese wine market.

Yantai State Asset Management Bureau - a government agency in the north-eastern city of Yantai - owns 55% of Changyu.

The state agency will also sell 10% of its stake in Changyu to another overseas company, although it didn't say who.

The remaining 12% will be retained by the Yantai city government.

The consumption of wine in China is still low, at just 0.22 litres per capita, said the US Agriculture Department.

This compares with 59 litres in France, 12 litres in the US and three litres in Japan.

[ariane] 11/2/2005 09:17

FRANKFURT (AFX) - Allianz AG plans to open two new insurance branches in
China every year to take advantage of the freshly-liberalised market there,
Sueddeutsche Zeitung reported, citing Werner Zedelius, head of Allianz's Asian
and Eastern European operations.
China is a "strategic market" for Allianz and offers "immense business
opportunities", he said. The prospects for foreign insurers are "extremely
promising" in the region.
The German insurance giant currently has only two branches in China --
located in Shanghai and Guangzhou -- and previously said it is planning
'considerable' investments in the region.
While the company acknowledges certain risks associated with heavily
investing in a region with rapid economic development, it sees itself as a
"long-term investor" who does not approach the matter "starry-eyed".
But Zedelius also told the newspaper that Allianz has been investing less so
far than hoped for because it has found few interesting opportunities.
The Chinese government on Dec 11 opened the insurance market to foreign
companies, removing geographical restrictions and allowing foreign companies to
hold up to a 51 pct stake in joint-venture insurance broking firms.
About 40 pct of private household savings in China are used for education,
health care and retirement arrangements, which are areas in which insurers are
in high demand. The Chinese life insurance market is expected to growth by about
one fifth per year until 2010, Zedelius said, referring to a study conducted by
Boston Consulting.
He declined to say when Allianz expects to start posting a profit in its
Chinese operations. "In a market, in which we are expanding so much, that
usually only happens after six or seven years."
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ms/tc

[maywillow] 05/2/2005 07:11

Volo on verge of £27m Chinese railway order

ALASTAIR REED


VOLO, the Edinburgh start-up, is on the verge of signing a $52 million (£27.7m) deal with China State Railways for hundreds of its innovative onboard entertainment systems.

Chief executive Ian Halifax told The Scotsman yesterday that a 12-strong delegation from China would be arriving in Edinburgh within the next two weeks to tie up the details of the deal, which could see 300 new carriages fitted with Volo's leading-edge technology.

"It's all going according to plan," he said. "We're bang on time, bang on schedule. This proves to us that the market is now breaking open and the great thing about it is that we're the only player in town."

The 300 carriages are part of a 4,000-strong order being placed in preparation for the Olympic Games in the Chinese capital of Beijing in 2008. It is being put together by a consortium of China State Railways and three unnamed banks, from the UK, US and Hong Kong.

Volo, which was only formed in 1999, has developed a touch-sensitive entertainment system which can be individually fitted into seat-backs and tables. It will work on a charge-per-use basis and will feature films, games and music videos as well as information about the trip and destinations.

According to Halifax, Volo was approached by the consortium's procurement arm eight months ago about the possibility of using the group's technology in the $27 billion order, thought to be the largest ever single order of rolling stock.

"The Chinese want to use the Olympics to show the world just how technologically advanced they are," Halifax said. "I think it's thrilling that a small Scottish company has been picked to illustrate that." He added that Volo is about 18 months ahead of its nearest competitor.

Only last month Halifax suggested that Volo could see sales of up to £30m by the end of the year. Yesterday he said: "If everything goes according to plan, we could be worth £100m plus by the end of the year."

Unlike in-flight entertainment, where travellers have no choice over what is viewed when, Volo's technology allows the user complete control.

While Halifax says the idea has been around for a number of years, it is only now that the prices have come down sufficiently to make the systems commercially viable.

Just two months ago the group raised £2m through equity funding, grants and loans. It has also signed up to a six-month trial scheme with Scottish transport giant FirstGroup.

[waldron] 03/2/2005 09:52

BEIJING (AFX) - The number of Internet users in China will grow by at least
30 pct in 2005 to 134 mln from 103 mln recorded at the end of 2004, the IT and
telecom research company Analysys International has predicted.
Analysys said the increase will push the development of online games and
voice over Internet protocol (VoIP) services.
Last year, China's online games subscriber base grew 61.07 pct year-on-year
to 24 mln, while the market rose 89.47 pct on a yearly basis to 3.6 bln yuan,
Analysys said.
In 2005, the online games subscriber base will increase to around 35 mln
people, representing a stabilizing growth rate of around 50 pct.
Analysys said it expects this growth to stablize at 50 pct in 2006, when
regulations on Internet services become tighter and more mature.
At the same time, VoIP services, which enable much cheaper conversations
between computers or between computers and landlines, will see rapid growth in
2005.
At present, VoIP services are provided by China Netcom and China Telecom,
the country's largest fixed-line operators, as value-added services provided by
Internet service providers, since the government has yet to draft regulations
for this service.
"It is hard to make a prediction of the market size at this point," Zhou Qi,
an analyst with Analysys told XFN-Asia.
(1 usd = 8.3 yuan)
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tom/bm/wpf

[maywillow] 29/1/2005 17:03

Foreign investors make a great leap backwards
(Filed: 29/01/2005)


Companies which poured millions into China are losing out to domestic rivals and state control, writes Malcolm Moore

Last May Heinrich Pierer, the chief executive of Siemens, flew to Shanghai to announce an ambitious expansion plan.

The company would invest €1billion (£700m) in China, building a towering glass headquarters in Beijing and raising its mobile phone production in Shanghai from 14m to 20m a year.


'Everyone is investing in China and there is excess capacity'
This week, Pierer resigned. Siemens Mobile is in disarray, having lost €143m in the first quarter, or €11 on every phone it managed to sell. Analysts say Siemens will have to pay someone to take the unit off its hands.

The German company has been put to the sword by the 30 mobile manufacturers that have sprung up since 1999. Peter Borger, head of Siemens Mobile China, acknowledges that "strong domestic competition" made it a "difficult year". He can say that again.

Siemens is not alone. Just three years ago, Motorola and Nokia ruled the roost in China, with Motorola claiming over 30pc of the market and investing heavily in production. Then the domestic players sprang up, pushing into small towns Western companies had never even heard of. Ningbo Bird said it had a "sea of people" strategy.

Chinese companies started selling models designed for the local market, such as phones studded with gemstones. By the time Nokia realised what was happening, and introduced a phone with a touchpad and stylus to make text-messaging easier in Chinese characters, it had lost ground. Motorola was hit the hardest. Joe Studwell, the author of The China Dream, says "Motorola made $1.3billion in Chinese profits in 2003, this year it will be lucky to make $100m."

The message is clear. China is a cheap place to manufacture goods, but investing to produce goods for the domestic market is fraught with danger. "For centuries, businessmen have gambled their capital on buying camel trains, chartering ships, building railways and financing highways in their efforts to open up the Chinese market, only to face disappointment," writes Studwell in his book.

Not much has changed. A £1 investment in the Hang Seng stock index 10 years ago would be worth only 35p today with all dividends reinvested. Studwell points to a report from the American Chamber of Commerce which showed that in 1999, only 10pc of foreign firms operating in China had managed to produce margins above their global average. By 2003, the figure had risen to 40pc. "That is a rise, but the story is that in a year of extraordinary liquidity, the majority of companies still could not beat their global average," he says.

The latest survey from the China Economic Quarterly shows that US companies earned $8.2billion in China last year, compared with $7.1billion in Australia, $8.9billion in Taiwan and South Korea, or $14.3billion in Mexico.

The Chinese government, perhaps overloaded with bureaucrats from the Great Leap Forward, has micro-managed the economy in a way that is both inscrutable and confounding. Shanghai looks like a glitzy hub of capitalism, but in reality, the local government is running the show. To fight off Wal-Mart and Tesco, the state ordered four supermarket chains to merge. DIY chains have been ordered to beef up to attack B&Q. The result is that private companies accounted for a meagre 10pc of Shanghai's GDP in 2003.

There is interference in the property, energy and metals sectors too. Bureaucrats afraid of rising inflation because of the drain on raw materials ruled that all new projects need state approval. Some entrepreneurs who decided to proceed without permission were thrown in jail. In the past two years, rampant economic growth and a steady stream of investment have washed China with cheap money, but government meddling has led to much of the money being wasted.

Private sector companies have been limited in growth because of the protectionist urges of regional politicians, who favour local firms. This meant that Chinese companies with plenty of cash on their hands used it to diversify.

Property companies bought telecom firms, telecom firms bought insurance companies. In some cases, this has paid dividends for foreigners; Alcatel sold its underperforming mobile handset business and Thomson/RCA its ailing television brand to TCL.

Now the government wants to crackdown on the huge number of bad loans in the entirely state-owned banking sector, and has effectively stopped the supply of cheap credit. To combat inflation, it has also restricted the growth of money supply from 17pc to 15pc this year.

This has played havoc with car sales. The combined profits of the foreign carmakers fell by roughly a third in the third quarter of last year, and General Motors saw its mainland profits slump by 44pc in the period.

Volkswagen is too touchy to reveal what profits its two Chinese joint ventures might be making, but its Shanghai operation posted a 27pc sales drop in October 2004 alone. BMW dealers have cut prices by 10pc in the last year, but still the buyers are staying away. They are waiting for World Trade Organisation rules to come into effect, which will slash import tariffs and eat further into the carmakers' margins.

There is worse to come. Toshiyuki Shiga, an executive at Nissan, says: "Everybody is investing in China and there will be excess capacity." The carmakers will invest over $10billion between them to treble production to 6m cars in five years' time. Skoda has said it will establish a joint venture in Shanghai with China FAW group. Margins will continue to be squeezed.

The good news, unsurprisingly, comes in the state sector, where companies are awash with cash and in the mood to make acquisitions. Arthur Kroeber, managing editor at the China Economic Quarterly, points to Minmetals, which has tabled a £3billion offer for Noranda, the Canadian mining company, and to Baosteel, which is in talks with CBRD in Brazil to set up a steel plant.

As for foreign firms, the companies that have been consistently successful are McDonald's, Starbucks and Yum Brands, the owners of KFC. Andrew Milligan, head of global strategy at Standard Life, says: "We only recommend investing in companies that actually sell stuff to the Chinese, not in companies that are making huge investments in China. Volkswagen, for example, will never turn a profit in China to justify the investment it has made."

The message appears to be sinking in. Foreign direct investment flows in the last quarter were only a sixth of what they were in the previous two quarters, says Diana Choyleva, an economist at Lombard Street Research who is predicting a hard landing for the Chinese economy.

In The China Dream, Studwell writes that in 1793, a mission from George III was rebuffed by the Chinese Emperor Qian Long. We have "not the slightest need of your country's manufactures", said the Emperor. This week, the chief executive of Ningbo Bird may even have used the same words when he publicly turned down the offer to buy out Siemens Mobile.

[grupo guitarlumber] 27/1/2005 09:12

LVMH, Other French Companies Lose $10 Bln to Piracy (Update3)
Jan. 27 (Bloomberg) -- LVMH Moet Hennessy Louis Vuitton SA, L'Oreal SA ani d other French companies lose a combined $10 billion a year to copyright, patent and trademark theft, a French official said, pointing to Chinese counterfeiters as major culprits.

France, where almost one in 10 people who wants to work can't find employment, loses 30,000 jobs a year because of counterfeiters, said Benoit Battistelli, commissioner of the National Institute for Industrial Property, the French patent office. Fake goods, including about 10 percent of French cosmetics, are valued as high as 300 billion euros ($392 billion), he said.

``Counterfeiting isn't as risky but is more profitable than drug trafficking,'' Battistelli said in an interview while attending a Hong Kong conference on intellectual property rights. ``Counterfeiting is a major issue between China and France.''

Under pressure from trading partners such as the U.S., China set up a task force last year, headed by Vice Premier Wu Yi, to step up the crackdown on counterfeiters. China said on Dec. 21 it would make theft of intellectual property punishable by as much as seven years.

China still isn't doing enough to enforce copyright and trademark laws, former U.S. Commerce Secretary Donald Evans during a visit to China this month before his tenure ended. Copyright violations cost U.S. companies as much as $25 billion a year. About 65 percent of counterfeit products in the U.S. are from China, he said.

Piracy Curbs

China is trying to curb piracy, Li Dongsheng, vice minister for State Administration for Industry and Commerce, said in an interview today at the Hong Kong conference. Rather than sue Chinese companies they suspect of piracy, foreign companies can appeal to the local branch of his agency for redress, Li said.

``Many foreign companies don't know they have that option, which is simpler and faster than the legal route,'' said Li.

Chinese companies, who generally lack global brands of their own, don't fully appreciate the importance of intellectual property rights, Li said.

Haier Group, which makes electrical appliances including refrigerators, was the only Chinese company that made the list of the world's 100 most recognizable brands last year, said state- run People's Daily.

That may change as Chinese companies expand, develop brands and venture abroad, he said. ``More Chinese companies will have brands to protect,'' said Li. ``We have to take piracy seriously as our economy develops.''

[1fox1] 25/1/2005 13:20

"Taiwans weighted/Taipex/whatever, could b a good 'in' for ppl who wanna invest in China, many chinese co's are HQ'd outside teh mainland, hong Kong, Taipei etc".

Erm, you are aware that China regards Taiwan as a rogue state and could invade in the next few years?

[maywillow] 25/1/2005 13:16

Beijing home improvement market building its presence
24 Aug 2004

--------------------------------------------------------------------------------



DIY gathering momentum.
Britain's B&Q, the world's third largest do-it-yourself (DIY) chain for building materials, opened its first store at Jinsiji on West Fourth Ring Road, Beijing in October 2003, followed by the opening of its Shuangjing and Laiguangying stores in 2004.

Meanwhile, OBI, the largest building materials supermarket in Germany and the fourth largest in the world, has signed leases for three stores in Beijing, which are due to open for business in 2004. To add to the list, IKEA of Sweden plans to open its second store at Wangjing in early 2005.

This invasion of building and DIY options is partially being met by domestic supermarkets, which are heavily into presenting home furnishings and associated products.

Borrowing from the concept of The Home Depot in the US, Orient Home in Beijing and The Home World in Tianjin have adopted similar approaches to supply management - with unified purchasing, pricing, marketing, distribution and settlement. The stores are run according to international standards with products sold at marked prices, with no fake or inferior goods allowed into the system.

In early December 2002, The Home World opened its first store in Beijing at Fenzhongsi, in the southern part of the city. The second store opened for business at Zhengchangzhuang on West Fourth Ring Road in November 2003.

The Home World plans to open eight stores in Beijing over the next two to three years.

Shanghai's Home Mart, meanwhile, opened its first Beijing store at Sijiqing Bridge in Haidian district. The second store with an area of 16,000 sqm opened for business at Xisanqi at the end of 2002. Home Mart plans to open up to 50 stores between 2004 and 2005.

Jiangsu's Redstar Macalline opened its first store in Beijing at Yuegezhuang on West Fourth Ring Road in November 2002 and intends to open two to three more stores in parts of eastern, northern and western Beijing. With Shanghai and Beijing as centres, it plans to form a chain of 40 supermarkets nationwide by 2008.

Orient Home opened two new stores in Beijing in 2003. The group has six stores in Beijing so far, with two more due to begin trial operations next year.

Easy Home, the representative of stall-based markets in Beijing, is continuously expanding its operation. It took over Shilihe Shoes City and Yuquanying Huandao Building Materials City, signed a contract with Century City at a bargain price, and opened four stores in the northern, southern, eastern and western sections of the Chinese capital.

At the end of 2002, Easy Home overhauled its store on North Fourth Ring Road and turned it into a modern shopping centre for home furnishings with stalls, boutiques and supermarkets under one roof.

It opened its first branch at Shilihe in August 2003, signed the contract for the management of Century City Shopping Mall the same month, and formally opened its Yuquanying store for business in October.

Easy Home is steadily expanding. Paints and boards are sold in its Shilihe store in supermarket format. Metal goods will also be offered soon.

Aika World is another home furnishing and building materials centre, with chain operation as its major means of expansion. It plans to open 10 stores in Beijing over the next two years and has embarked on market expansion nationwide.

Among the four Aika World stores which expanded in 2003, the one on West Fourth Ring Road has B&Q and Auchan as neighbours. They complement one another perfectly as furniture store, building materials supermarket and general merchandise market, apparently with little overlap.

The Aika World store at Sijiqing has Home Mart to its west and mainly sells high-end household goods.

The other two new stores don't deal in either household goods or building materials. Aika Dazhongsi Collectibles Transaction Centre and the Beijing Aika International Commercial Centre are major general stores, and when the latter is completed in 2005 it will be the largest commercial centre in the country.

In fact, there is an oversupply of building materials marts in Beijing. Small centres with similar modes of operation cannot compete and are expected be taken over by larger operations with financial clout. Chain operations seem to be an inevitable development in a growing market for building materials.

With further segmentation, entire streets selling building materials have gradually emerged. A big advantage of this arrangement is that consumers can find a wide selection of goods of different brands on the same street. Warehouses at the back of the shops help reduce storage and transportation costs, so making the merchandise more price-competitive.

Foreign players are both buyers and sellers

IKEA has set up purchasing centres in Shanghai, Harbin, Qingdao, Guangzhou and Yunnan. As much as 70% of its merchandise is also sold in China - and materials are purchased locally.

Meanwhile, the marketing strategy of OBI is to shift its global purchasing centre to Asia, primarily to China, where it also intends to open retail outlets.

As for B&Q, sales outside the UK account for 39% of its total sales, but 80% of its products are purchased globally, with 10% coming from China.

B&Q's China purchases account for 79.9% of its purchases in Asia. Home furnishings, electrical appliances and articles of daily use are mainly purchased in Guangdong, while house brand electric tools are all purchased in the Pearl River Delta.

Most of the building materials supermarkets that did well elsewhere in the country have not been very successful in Beijing.

To take advantage of the gap in demand, foreign home marts such as OBI, B&Q and IKEA have now embarked on large-scale expansions in the Chinese capital. Orient Home, Easy Home and other specialised building materials marts have also been steadily expanding.

from Xing Jiasen, Beijing Office

[maywillow] 25/1/2005 13:04

Chinese DIY superstore aims for Home Depot-like growth - International Pages - Brief Article
Home Channel News, Jan 22, 2001 by Jason Gonzalez
Save a personal copy of this article and quickly find it again with Furl.net. Get started now. (It's free.)Orient Home striving to be No. 1 in a growing market

BEIJING -- Orient Home, the four-unit Chinese home improvement warehouse retailer that debuted in August 1999, recently revealed plans to open between six and 10 new stores by the end of this year. Orient Homes has larger ambitions to open a total of 40 stores by year-end 2003 and 1,000 outlets by 2010.

After opening three new stores in 2000, in the mid-sized Chinese cities of Jilin, Shenyang and Chengdu, Orient Home is set to establish six "regional centers" this year. These regional centers, according to Zhao Ying Qaing, Orient Home's manager of information technology, are subsidiary companies developed for the purpose of opening a new store. These regional centers will be charged with executing the company's store-opening plans this year.

"The fast expanding can reduce the cost and hold the market," explained Wang Yue, president and CEO of Orient Home. "This is the essential element of the chain store."

Orient Home is not alone in its desire to dominate an emerging Chinese retail DIY market. An estimated seven companies are operating at least 20 DIY warehouse stores in China today. Included among those players are homegrown operations, such as The Home Way and Homemart, and international joint ventures, such as B&Q and OBI China. While it is tough to pinpoint the exact size of the market -- and each retailer seems to have its own estimate -- the numbers do suggest that the DIY market is, at the very least, worthy of some retailer investigation.

One source, the Chinese Ministry of Construction, said the total sales of Chinese "house fitting-up and decoration" in 1999 were approximately 120 billion Chinese renminbi (US$14.5 billion). During the next two to three years, that figure is expected to climb to 300 billion RMB (US$36 billion).

Last year, Orient reported some remarkable sales results out of its 15,000-squaremeter (162,290-square-foot), 30,000-sku Beijing store. Zhao Ying Qaing said the Beijing headquarters store recorded year-end revenues of 2.5 billion RMB (US$302 million). The company did not divulge its chainwide sales.

Orient Home frequently compares itself to American-style retailers in general, and to Home Depot in particular. The chain has connections to both. Prior to joining Orient, Wang Yue served as president of The Home Way, China's first DIY warehouse, from 1994 to 1998. The Home Way received a great deal of consultation from Home Depot before it opened for business. Orient also purchased a retail information technology system from the Scottsdale, Ariz.-based JDA Software.

"Orient Home will overcome the difficulties [of the market] and provide the best service to our customers like Home Depot does in the U.S.A.," said Zhao Ying Qaing. "We believe Orient Home will become the number one DIY retailer in China."

[waldron] 25/1/2005 05:29

BEIJING (AFX) - China's gross domestic product (GDP) rose 9.5 pct
year-on-year in the fourth quarter of 2004, up from 9.1 pct in the third
quarter, Li Deshui, the director of the National Bureau of Statistics (NBS)
said.
The aceleration of economic growth in the last three months of the year was
due to rapid growth in agriculture, catering, transportation, and other service
sectors, he said at a news conference.
China's GDP rose 9.5 pct for the first nine months of 2004.
amj/tr

[waldron] 25/1/2005 05:27

(Updating to add more figures)
BEIJING (AFX) - China's retail sales rose 13.3 pct to 5.4 trln yuan in 2004,
but only 10.2 pct after adjusting for inflation, the National Bureau of
Statistics (NBS) said.
This compares with a growth rate of 9.1 pct in 2003.
The NBS did not provide a reason for the increase.
Urban retail sales rose 14.7 pct in 2004, while sales in rural areas were up
10.7 pct for the same period.
Retail sales of telecommunication products surged 41.7 pct last year. Home
appliance sales were up 13.7 pct.
Sales of oil and refined products jumped 45.9 pct in 2004, while vehicle
sales increased 23.4 pct.
Catering sector sales rose 21.6 pct.
In December alone, retail sales rose 14.5 pct year-on-year, compared with a
growth rate of 9.7 pct in November.
(1 usd = 8.3 yuan)
amj/tr

[maywillow] 21/1/2005 11:27

January 21, 2005

Kingfisher to buy 25% more goods from China
By Sarah Butler



KINGFISHER, the owner of B&Q, plans to increase the amount of merchandise it buys from China by up to 25 per cent this year, after the country eased restrictions on exports.
The DIY chain said yesterday that it expects to buy $500 million (£267 million) of goods from China this year, in an effort to bring down prices and introduce new products into its European stores.



B&Q has 21 stores in China, which have built up a network of local suppliers. The retailer said it was working with ten of its top suppliers to prepare them for exporting goods to the UK and France.

China joined the World Trade Organisation in 2001 but only removed certain restrictions governing the export and import of goods in December. Previously, it was difficult for Chinese manufacturers to sell to both the domestic and overseas markets.

Ian Cheshire, chief executive of international and development at Kingfisher, said that the retailer's size gave it greater buying power.

This spring, B&Q in the UK is planning to promote small air-conditioning units that can be fitted by consumers without expert help. The units cost about £200, a quarter of their price at specialist outlets.

A similar method is also planned to introduce hard wood flooring from Poland, where Castorama, another Kingfisher-owned chain, has a reasonably large business.

Gerry Murphy, chief executive of Kingfisher, said: "If we take the prices down we are finding we can create a market that wasn't there before."

[tpaulbeaumont] 21/1/2005 04:43

just seen this on D4Fs instruments

Taiwans weighted/Taipex/whatever, could b a good 'in' for ppl who wanna invest in China, many chinese co's are HQ'd outside teh mainland, hong Kong, Taipei etc

[maywillow] 18/1/2005 10:03

BEIJING (AFX) - China said it was "not wise" of the US to slap new sanctions
on Chinese firms suspected of helping Iran in its quest for weapons of mass
destruction and missiles.
"The US government's wanton launch of sanctions against Chinese companies
without real evidence is not a wise choice," foreign ministry spokesman Kong
Quan told a regular briefing.
A State Department notice published in the latest issue of the Federal
Register said the companies are being penalized for transferring to Iran
"equipment and technology controlled under multilateral export control lists."
A company from Taiwan and one from North Korea have also been targeted by
the US decision.
"We have formulated a series of regulations and laws to prevent the spread
of weapons of mass destruction," Kong said. "We will crack down on such
actions."
The seven Chinese companies include China North Industry Corp
(Norinco) and China Great Wall Industry, which both have close ties to the
People's Liberation Army.
The two are already under US sanctions for violating various export control
regimes. It was not immediately clear how the new measures will affect
their business.
ph/sai/sm/wk

[grupo] 18/1/2005 06:21

Unity offers strength for small retailers

www.chinaview.cn 2005-01-18 08:11:59

BEIJING, Jan. 18 -- Group purchasing may be a handy way to save money for a young man like Zhang Quan, but it could be the only hope for China's small retailers.

Zhang normally joins in a group purchase when he wants to buy expensive goods such as construction materials and electronics. These group purchases are normally organized by a professional company or one of his neighbours.

Having greater purchasing power, this way of shopping can help lower prices by an average of 15 per cent.

As they snap up the bargains, what Zhang and his fellow shoppers are unaware of is that group purchasing may present China's small retailers with their only means of survival.

December 11 last year was a date greeted by foreign investors, as it marked the end of all geographic, equity ratio and business scope restrictions on their activities in China's retail sector, leading to full market liberalization.

But it is a day that China's small retailers remember with very little cause for celebration, as they will lose their advantages on locations as these retail behemoths open more stores in smaller cities and local communities.

What is worse is that these small retailers have to sell goods at prices higher than the giants because it is hard for them to bargain with powerful suppliers such as Procter & Gamble and Coca-Cola.

This means that some of them are looking at the possibility of forming purchasing alliances such as those established by the likes of Zhang in order to buy goods at lower prices.

First attempt

China's first such group, Shanghai Jialian Company, was established in September last year.

The group has four members in four provinces - Jiajiayue Supermarket Co Ltd in East China's Shandong Province, Sanjiang Shopping Club Co in East China's Zhejiang Province, Bubugao Supermarket Co in Central China's Hunan Province and Jiayong Commercial and Trade Co in South China's Guangxi Zhuang Autonomous Region.

The four companies have combined annual sales lower than 6 billion yuan (US$725 million), even smaller than French retailer Carrefour's sales in China, Wang Peiheng, president of Jiajiayue, the largest company in the group with an annual sales of 2 billion yuan (US$241.6 million), pointed out.

"We have no other way to go. If the small companies cannot unite, many of them will simply collapse," Wang said.

Unity has already paid dividends, according to Ding Zhiwei, general manager of Shanghai Jialian.

The company will bargain with suppliers after the four firms in the alliance have sent their purchasing agents to put their orders together.

"For the more than ten brands we buy through group purchases, costs have been lowered by 6 or 7 per cent," Ding said.

The lower costs enable the four retailers to offer prices on a par with their giant competitors.

In addition, the four retailers can help order local specialities for each other at lower prices, Ding said.

For example, Jiajiayue in Shandong offer apples, which are cheaper in the province due to their plentiful supply. Similarly, Jiayong in Guangxi can help buy lychees for its partner firms.

If more retailers join the group, Ding said they will have an even greater advantage when it comes to prices.

"If we require a large quantity, we can even directly order the goods from manufacturers and use our own brands," Ding said.

Voluntary chain

Experts said Shanghai Jialian is an early example of a voluntary chain store, which has a history of more than 50 years in Europe and the United States.

These chains developed in the late 1950s in Europe and United States when several independent grocery shops realized that they were unable to compete with the big supermarkets, according to Yu Shuhua, a researcher at the China Commercial Economy Research Centre.

So they organized themselves into groups and bought in bulk at discount prices from a central marketing organization and were then able to pass on this discount to their customers.

Although the shops took the title of the group's chain and carried "own brand" goods they were independently owned.

Voluntary chain stores have really provided a lifeline for many grocery shops in the United States and Europe which would otherwise have had to close down, Yu said.

Examples include the Independent Grocers Alliance (IGA), Sentry Hardware, and Western Auto.

With voluntary chains, member enterprises may collaborate in commodity procurement and distribution and in business operation, while retaining the ownership of their assets and independently conducting financial audits.

Yu pointed out that Jialian still has some way to go before it becomes such a voluntary chain, as the firms so far only co-operate in terms of purchasing, rather than distribution and management.

Time for China

Yu said it is time for Chinese small retailers to consider forming voluntary chain as their very survival is under threat.

Small retailers are going bankrupt in unprecedented numbers, battered by the winds of intense competition brought by increased foreign involvement in the sector.

Statistics show that more than 150 supermarkets closed down across China in the 18 months up to the end of last year.

This fear of bankruptcy intensified as China fully opened its retail market.

The full opening of the sector could see the expansion of the foreign conglomerates to small and medium-sized cities, the entry of brand new foreign retailing conglomerate, and an increasing number of mergers and acquisitions.

Wal-Mart, the world's biggest chain retailer is to set up a supermarket in the city of Yuxi in Yunnan Province, and Taiyuan, the capital of North China's Shanxi Province as a part of its 15 new stores in China this year, kicking off Wal-Mart's penetration into medium-size cities.

German-based Metro said it will increase its current 21 stores by 50 per cent this year.

B&Q, which has opened outlets in Beijing, Shanghai, Suzhou, Kunming, Shenzhen and Hangzhou, plans to open 10 to 15 shops annually in China.

Domestic giants, facing this aggressive challenge from foreign counterparts, will follow by opening more stores.

"With big retailers opening more stores and extending their networks to every corner of the country, small retailers will have two choices - be acquired or close down," said Yu.

But most small retail firms are owned by private persons, who would like to have their own business, Yu said.

More than 99 per cent of Chinese retailing enterprises are small or medium-sized enterprises.

Even in big cities such as Shanghai, Beijing, Tianjin and Guangzhou, where the retail business has developed most quickly, small retailers account for 60 per cent, 68 per cent, 85 per cent and 75 per cent of the market.

IGA's Asia-Pacific General Manager Ye Minzheng said the market situation in China is similar to that in the United States when voluntary chains were taking shape.

"Most of the small retailers were kicked out of the US market in 15 years. But those who chose to set up voluntary chains or had a clear market position survived," Ye said.

But in China the time span will be shorter, and could see small retailers forced out of the market within seven years, Ye said.

"It is time for them to look at some practical choices."

Concerns to be addressed

But China's small retailers are reluctant to join voluntary chains, although they have high expectations about this business mode.

"We know the mode is efficient in the United States. But we will not take part in it until it is proven to be successful in China, which has many special features," said a manager of a small supermarket in Beijing.

The key to the successful operation of voluntary chains lies in group purchasing and central distribution, which applies to 90 per cent of the goods for IGA, but only accounts for a very small percentage at Shanghai Jialian.

"China's logistics industry only gained its development momentum in recent years. When the logistics industry matures in China, the conditions will be ripe for large numbers of small retailers to join voluntary chains," said Yu.

China also lacks a credit system, which makes it difficult for the organizers of voluntary chains to collect money from small retailers if they fail to pay, Yu said.

The entry of global leaders in running voluntary chains will help establish standards for the industry in China, according to experts.

IGA, the world's largest voluntary supermarket chain, has signed co-operative agreement with the Sanjiang Shopping Club based in Ningbo in coastal Zhejiang Province, a member of Jialian.

IGA, with global sales of more than US$21 billion in 2003, includes over 4,000 independent supermarkets in 48 states in the United States and 42 foreign countries.

The European giant SPAR entered the Chinese market after signing a deal with Shandong retailer Jiajiayue Supermarket Co, another member of Shanghai Jialian.

The agreement will result in the opening of 15 new SPAR supermarkets in East China's Shandong Province over the next three years.

SPAR, the biggest chain of this kind in Europe, has 15,000 members in 34 countries and recorded total sales of 26.8 billion euros (US$35.1 billion) in 2003.

(Source: China Daily)

[maywillow] 13/1/2005 09:36

Opening retailing market up for grabs
(China Business Weekly)
Updated: 2005-01-13 09:48

Residents of Wangjing, a large, modern residential area in northeastern Beijing, will soon have greater shopping options.

Their selection is currently limited to Jingkelong supermarket, Zhongfu Department Store, Zhengshi Home Furnishing Market and a recently opened B&Q hardware store. The first three are domestic retailers.

But that is about to change.

"I found out from newspapers and the Internet that some giant foreign retailing enterprises, such as Wal-Mart, Carrefour, Ikea ... are selecting sites here," Wang Jianchen, a middle-aged Wangjing resident, said.

While Wal-Mart and Carrefour would not provide details, sources at the Beijing Commerce Bureau confirmed the two retailers are planning to locate in the community.

It could be the beginning of a nationwide phenomenon, especially as restrictions on investment, shareholding structure, store location and number of outlets no longer apply to overseas retailers.

Experts believe overseas retail giants are on the path of expansion now that they are allowed to operate wholly owned stores.

The restriction that prevented them from operating wholly owned stores was lifted on December 11 in accordance with China's commitments to the World Trade Organization.

Easing of the restrictions is not the sole reason for overseas retailers' expansion plans, Todd Wang, corporate communications manager of Carrefour China, said.

"We are expanding in China because the market is maturing and there is huge potential," he said.

Ministry of Commerce sources said retail sales in the world's seventh-largest economy will likely be up 13 per cent last year, to hit 5.2 trillion yuan (US$628 billion), and will likely climb more than 10 per cent this year.

Foreign retailers expand

Per capita income in China's urban areas, home to about one-third of the population, rose 40 per cent between 1999 and 2003, and topped US$1,000 a month, for the first time, in 2003.

Chinese consumers were the most confident shoppers in a survey of 38 industrialized economies released on November 24 by AC Nielsen, a leading market research and consulting company.

With consumption conditions ripe, overseas retailers have a gamut of expansion opportunities.

One option is establishing wholly owned enterprises.

France-based Decathlon, Europe's leading producer and retailer of sporting goods, recently became the first wholly foreign-funded retail enterprise in China when domestic partner Shanghai Zhonglu agreed to sell off its stake.

When Decathlon Zhonglu was launched in 2003, Shanghai Zhonglu took a 35-per-cent stake -- then the minimum for a domestic investor in a retail joint venture -- for 7 million yuan (US$843,000).

Decathlon operates two sporting goods supermarkets in East China's Shanghai Municipality. The firm is expected to open its third store in the city early this year.

French retailer Carrefour, the most successful overseas retailer in China by sales, reportedly signed an agreement with the Wenzhou Foreign Trade and Economic Committee in October to launch a wholly owned hypermarket in the prosperous city of East China's Zhejiang Province.

British hardware store B&Q is conducting a study to determine the feasibility of setting up a wholly owned store in Southwest China's Chongqing Municipality this year, reveal sources close to the world's third-largest and Europe's No 1 home-improvement chain operator.

In addition to striking out on their own, overseas retailers intend to scale up their business networks through mergers and acquisitions (M&As).

B&Q, which has 20 stores in China, has spent US$13.2 million buying five PriceSmart stores, out of 30, located in Heilongjiang, Shandong, and Sichuan provinces and Tianjin Municipality.

The outlets will be transformed into B&Q hypermarkets and will reopen for business this year.

"B&Q is focusing on the markets in North, western and Northeast China, and the stores we acquired are at the right locations for the company's further expansion in the country," company spokesman Hu Lifeng told China Business Weekly.

Meanwhile, Taiwan's top retailer, President, has taken a stake in PriceSmart's N-mart, a supermarket business, for 600 million yuan (US$72.29 million) and is eyeing the western region, Lily Lin, a manager at President, said.

Yuan Jianjun, a researcher at Huaxia Securities, told China Business Weekly that while launching wholly owned entities will help overseas retailers implement their strategies more independently and flexibly, their preferred mode of expansion will likely be M&As, "which are more economical and efficient".

Instead of greenfield investments -- such as the establishment of a new store or entity from scratch -- M&As offer a shortcut to overseas investors eager to secure a developed research network, as well as production, distribution and sourcing, Yuan said.

It is not just metropolises and cities in affluent provinces that overseas chains are eyeing -- they are also focusing on second-tier and smaller cities, said Wang Yao, deputy secretary-general of the China General Chamber of Commerce.

John Xu, director of external affairs for Wal-Mart China, said the lifting of the barriers to overseas retailers -- who were previously restricted to provincial capitals, municipalities and special economic zones -- will provide an opportunity for Wal-Mart, and others, to invest in under-served markets.

"Wal-Mart is actively evaluating the opportunities in China's provincial cities. We expect to open 10 to 15 stores in 2005, based on our current approvals, and move into the first provincial cities in 2005."

Wal-Mart, the world's largest retailer, currently owns 42 stores in 20 key cities that stretch from Northeast China's Harbin to Southwest China's Kunming.

To date, Wal-Mart has invested 1.6 billion yuan (US$192 million) in China.

Last month, Wal-Mark clinched a deal with the Shaoxing Investment Promotion Bureau to spend 300 million yuan (US$36.14 million) to establish a 450,000-square-metre hypermarket in the city, which is located in East China's Zhejiang Province.

Three months earlier, Wal-Mart inked contracts with Yuxi, in Yunnan Province, in Southwest China, and Taiyuan, capital of Central China's Shanxi Province, to open supermarkets this year.

Reliable sources say Wal-Mart is negotiating, separately, with 10 cities to open stores. Wal-Mart officials have declined to comment.

Last month, Carrefour said it plans to boost the number of its supermarkets and hypermarkets in China to 59 this year, from the current 53, mostly in smaller cities. It also intends to add about 100 Dia convenience stores.

Germany-based Metro, which has 22 supermarkets across China, announced last year that it plans to launch another 10 supermarkets in China this year, in smaller cities, and that it intends to spend 300 million euros (US$400 million) in the Chinese mainland within the next five years.

Sources close to Carrefour and Metro said the retailers are exploring the markets in smaller cities, such as Quanzhou, in Fujian Province; Yixing, in Zhejiang Province; and Weifang, in Shandong Province.

Yu Shuhua, vice-director of the Zhongshang Commercial Economy Research Centre, says foreign retailers' moves to expand into second-tier cities were based in part on the limitations in first-tier cities, where the markets are becoming saturated after a decade of frenzied growth.

"Also, operational, land and labour costs are lower in second-tier cities," Yu said.

Yan Ligang, spokesman for the Beijing Commerce Bureau, said that given the characteristics of the Chinese market -- a large population base, vast territory, different income levels and various cultural backgrounds -- joint ventures might still be the most practical and efficient model for overseas retailers' long-term development in smaller cities.

"Local partners can help select good locations, help adapt to local consumption habits and ensure smooth public relations," Yan said.

"China is a collection of markets, not just a single market. So, I don't think foreigners will just go it alone, especially when they want to penetrate the second- and even third-tier cities."

Meanwhile, Yan put into perspective the expansion plans of overseas retailers and their shares of the market.

"Foreigners are not likely to overwhelm China's retailing market, and local companies will not be wiped out as competition increases," Yan said.

"Overseas companies' share of the market may grow to 10 per cent in three years, from 7 per cent now. Foreign and local companies have different competitive strengths and can carve out their own niches," he says.

Figures from the Ministry of Commerce indicate the four largest Chinese retailers -- Wumart, Hualian, Lianhua and Suguo -- had more than 20 times the number of stores compared with the combined total, in China, of Wal-Mart and Carrefour.

[maywillow] 13/1/2005 07:09

BOC wins important new business with two Asian steel producers

Maanshan Iron & Steel forms joint venture with BOC in China while Jindal
Vijaynagar Steel selects BOC India as its preferred gas supplier

Windlesham, UK - 13 January 2005 -- BOC and Maanshan Iron & Steel Co., Ltd (Ma
Steel) have signed a contract to form a 50/50 joint venture (JV) to meet the
growing industrial gases needs of Ma Steel in Maanshan City, Anhui Province,
China.

Ma Steel is one of China's premier iron and steel producers. Last year it
produced 8 million tonnes of finished steel products. The company is recognised
by industry analyst World Steel Dynamics as a world-class steelmaker.

The JV, Maanshan BOC-Ma Steel Gases Company, will initially invest nearly
US$100 million in building and operating two large air separation units (ASUs)
each capable of producing 1,400 tonnes a day of oxygen. The plants will produce
a combined total of more than 5,000 tonnes a day of oxygen, nitrogen and argon
and are expected to come on stream in 2007.

BOC's subsidiary, BOC India Limited, has been awarded the contract for
supplying the gases requirements for an expansion programme being undertaken by
Jindal Vijaynagar Steel Limited (JVSL) at Bellary, Karnataka, Southern India.

JVSL has a world-class steel making facility at Bellary and is currently
doubling its capacity at the site to 4 million tonnes a year. BOC India Ltd has
signed a fifteen-year agreement to supply it with 1,400 tonnes per day of
oxygen and nitrogen and proposes to build a new 855 tonnes a day ASU at
Bellary. The plant will be commissioned by 2006. BOC sees this latest
investment of up to US$40 million as a major move in developing its strategy in
southern India.

With these two developments, BOC has significantly enhanced its market presence
in the rapidly growing Asian iron and steel industry. John Bevan, chief
executive, BOC Process Gas Solutions commented, "BOC is delighted to be
selected by these high performance organisations. They are leaders in important
growth markets. It highlights BOC's ability to leverage its world-class
technology to service the iron and steel industry. These investments in the two
most populous markets in Asia are confirmation of BOC's focus on the region and
its commitment to invest in opportunities there."

For further information please contact:

Contact: Chris Marsay, Director, Investor Relations, The BOC Group

Tel. [phone] (International [phone])

The BOC Group (NYSE:BOX), the worldwide industrial gases, vacuum technologies
and distribution services company, serves two million customers in more than 50
countries. It employs 43,000 people and had annual sales of nearly £4.6 billion
in 2004. Further information about The BOC Group may be obtained on the
Internet at www.boc.com.



END




BOC Grp.(BOC)