gemuhope

China’s top 500 perform better than US’

Profits of the top 500 enterprises in China exceeded that of their counterparts in the United States, a domestic ranking report said Saturday.
Net profits of the Chinese companies are 170.6 billion U.S. dollars in the first half of this year, while the figure for the U.S. companies are 98.9 billion U.S. dollars, according to a report released by the China Enterprise Confederation (CEC) and China Enterprise Directors Association.
Although the net profits for the Chinese heavyweights are down 12.4 percent from a year ago, it is still less than a 84.67 percent fall for the U.S. companies, which see the worst decline in 55 years recorded by the U.S. Fortune magazine.
Wang Jiming, vice president of CEC, said although the business data showed that the Chinese companies were less vulnerable to the global financial crisis than the U.S. counterparts, it did not mean they have made substantial improvements in comprehensive competitive power.
He said Chinese enterprises enjoy relatively better policies and domestic market environment.
Chinese companies still lacked behind world’s leading enterprises in resource allocation, innovation, international presence, business model and corporate culture, he noted.
The threshold of this year’s top 500 companies in China is raised to 10.54 billion yuan (1.55 billion U.S. dollars) for sales revenue, compared with last year’s 9.31 billion yuan.

Aquila exec: Deal with Baosteel good for both

Strategic cooperation between Australia’s Aquila Resources and China’s Baosteel focuses on win-win outcomes, an Aquila Resources executive told Xinhua on Thursday.
Russell Tipper, general manager of iron ore for Aquila, said in a telephone interview with Xinhua that the agreement signed on Aug 28 between the two provides a foundation for long-term strategic cooperation and will ease the burden of cash to develop Aquila’s key projects like the coal project in Queensland and the iron ore project in Western Australia.
He said some of Aquila’s projects will require large amounts of capital to bring it into production.
Asked whether the agreement will be approved by Foreign Investment Review Board (FIRB), Tipper said: “I am confident the FIRB will agree that Chinese Baosteel’s participation would be good for both their projects and Australia.”
After the transaction, Baosteel will take a 15 percent stake in the Australian miner and will appoint one director to the board of Aquila. Tipper believes this will not cause concern, saying that “Baosteel will have up to 19.9 percent of Aquila’s stake and it will not control Aquila.”
Tipper said with the access to low-cost Chinese financial institutions as outlined in the agreement, Aquila plans to expand two major projects, the West Pilbara Iron Ore Project in Western Australia and the Eagle Downs Coal Project in Queensland, adding that “this will include the building of Aquila’s own railway networks and a new port.”
In an earlier interview with The Australian, chairman Poli said that he believes “the strategic co-operation is all about assisting Aquila, and not managing or controlling them.”
“China is very keen to invest in Australia and, with this transaction, we should have no problems with FIRB,” he said.
Under the agreement, Baosteel will invest as much as A$285.6 million ($237 million) in Aquila via a placement of up to 43.95 million shares at A$6.50 a share which Tipper has said “was acceptable to both parties to achieve the win-win outcome.”
Aquila Resources is headquartered in Perth, Western Australia, which is home to Australia’s abundant iron ore resources. The company has major coal, iron ore and manganese projects in Queensland, Western Australia and South Africa.

Cosmetics firm Elizabeth Arden expands in China

US cosmetics magnate Elizabeth Arden Inc is expanding its makeup and skin care counters to China’s second-tier cities, even as it penetrates deeper into existing markets in more affluent cities such as Beijing and Shanghai.
“We have gone to all the key cities in China and are already in some second-tier cities, where we think consumers have a need for prestige beauty products,” said Sebastian Clifton-Welker, the Asia Pacific & Oceania marketing director for Elizabeth Arden International.
Even though they lack the disposable income of consumers in first-tier cities and have not been as exposed to Western lifestyles, Elizabeth Arden hopes its testing counters will allow new customers to try out the company’s cosmetics products.
“We are enthusiastically expanding our testing counters so they can have access to Elizabeth Arden products for whenever they are ready to buy our products,” said Smith Chih-Hsin Chen, president of Elizabeth Arden Greater China.
Elizabeth Arden already has established locations in 77 cities. The company has 150 beauty counters, which they plan to expand to 200 in 2010.
“In China, average spending on our products is 800 yuan for each transaction,” Chen said.
The numbers and expansion plans are impressive given that Elizabeth Arden joined the Chinese market only in late 2005, much later than other international cosmetics brands such as Estee Lauder, Lancome, Chanel and Dior.
Growth market

Elizabeth Arden Inc opens a new counter in a premium department store in Beijing. The US-headquartered cosmetics giant is striving to enter China’s second-tier cities and offer more Chinese consumer-tailored products. [File Photo]

Like many of its competitors, Elizabeth Arden is now focusing on China as a growth market, Clifton-Welker said.
The report “Cosmetics and Toiletries Market in China” from the market research firm RNCOS stated that China’s skin care market is expected to grow 12.5 percent annually from 2008 through 2012.
Much of the focus for Elizabeth Arden will be on skin care versus makeup.
“Skin care products make up 80 percent of the beauty industry’s product share and cosmetics only about 10 percent,” Chen said.
Since Chen joined Elizabeth Arden in early 2006, he said he has sought to make the company a trusted brand.
Testing, or “first-touch”, counters are an important way to allow consumers a chance to personally try the Elizabeth Arden brand, he said.
“That is why I set up more counters in the past three years for people to get a first-hand touch,” Chen said.
“It’s also important to maintain brand value,” he added. “If faulty products appeared on the market, there would be no brand value left.”
Chen said he is not worried about competition from inexpensive domestic brands.
“Those who use those inexpensive local brands today might turn to Elizabeth Arden another day,” Chen said.
Chen said Elizabeth Arden now only accounts for about 1 percent of the market for beauty products in China.
“In addition to getting a larger share from that untapped 99 percent, I will also work to maintain the 1 percent I’ve got,” Chen said.
Chen conceded it’s difficult to build and maintain customer loyalty when two-thirds of women make “irrational” purchases.
“Therefore, we have to set up counters so that customers can reach us whenever they want to buy skin care products, either rationally or irrationally,” he said.
Since China adds on charges of 10 percent for duty and 17 percent for value-added taxes on imported beauty products, many domestic consumers turn to duty-free shops in foreign countries or in Hong Kong.
But Chen said he is not worried whether the practice is affecting sales on the Chinese mainland.
“I’m happy, because Hong Kong sellers are helping by nurturing and educating a potential consumer base for me,” he said.
Adding ‘whitening’
Understanding that Chinese women favor cosmetics that produce “whiter” skin, Chen said Elizabeth Arden developed “whitening” skin care products for the market.
“We understand that if our brand wants to make a splash in the Chinese market, we have to invest more in research and development of whitening products,” Chen said.
To that end, the company in 2007 in Asia launched its White Gloves line, which later became a popular seller in the Chinese market.
Elizabeth Arden also is introducing anti-aging skin care products to China.
The company introduced its Prevage line of anti-aging facial products to China on Aug 18 to increase its market share in this fast-growing skin care sector.
Prevage products contain the anti-oxidant ingredient Idebenone, which is a bioengineered molecule that is 60 percent smaller than Co-Q10, which is naturally found in the human body and works to combat the damage caused by harmful free radicals. But the Co-Q10 molecule is too large to cross the barrier of human skin, researchers said.
“In essence, we are not aging, we are oxidizing – rusting in our suits of armor,” said Joseph A. Lewis, a cosmetics research scientist who developed Idebenone.
In China, where many consumers believe natural ingredients such as herbs are of higher quality than synthetic ingredients, Lewis said it’s a matter of letting consumers know that synthetic ingredients can be safer and more effective.
“The assumption that a natural molecule is always good is not exactly correct. There are a lot of very toxic natural molecules such as the venom in bee stings and snake bites,” Lewis said.
Lewis said Idebenone can penetrate skin and mitigate the same kind of oxidative stress that can cause metal to rust or apple slices to turn brown.
“No other natural molecules have the same effect,” he said.

Lee quits as president of Google China

Google Inc, owner of the most used Internet search engine in the world, said on Friday its China president Kai-Fu Lee will leave the company to start his own business in Beijing.
Boon-Lock Yeo, director of Google’s Shanghai engineering office, and John Liu, who heads the sales team in China, will take on Lee’s responsibilities, the company said in a statement on Friday.
Lee disclosed that he would form his own venture soon.

Kai-Fu Lee 

Lee’s departure will not affect Google’s China business too much, said industry insiders. His successors will still face the challenge of competing in a market dominated by Chinese rival Baidu Inc, as well as online censorship.
“Google is more popular than four years ago. It is rising but still lags behind Baidu,” said Jiang Qiping, secretary general, center for informatization studies at the Chinese Academy of Social Sciences.
According to Beijing-based research firm Analysys International, Baidu held 62 percent of China’s search market in the second quarter while Google held 29 percent.
In June, Google was criticized by the Chinese government for providing links to pornographic and violent material. Some of the company’s services became inaccessible to domestic web users for hours.
Lee joined Google in 2005 after seven years at Microsoft, where he was a computer scientist and corporate vice-president. His move to Google triggered a lawsuit from Microsoft, in which the company sued Lee and Google.
Microsoft claimed that Lee was violating his non-compete agreement by working for Microsoft’s direct competitor in an area that overlapped with his role at Microsoft. The dispute lasted for five months and ended up in a private agreement between the two companies.
Lee, 47, led Google during a period of big expansion in China in the past four years, said industry insiders.
“He has made great achievements in the past four years in Google and now it is time for him to realize his own dreams,” Zhang Yaqin, corporate vice-president of Microsoft and a friend and former colleague of Kai-Fu Lee told sina.com on Friday.
“Kai-Fu has made an enormous contribution to Google over the last four years, helping dramatically to improve the quality and range of services that we offer in China,” said Alan Eustace, Google’s senior vice-president for engineering, in a statement.
Lee is an icon among many Chinese young students. “He is open and nice to young people. I respect him,” said Jin Shifei, a postgraduate of computer sciences in Tsinghua University, who held an internship in Google China last summer.
Jin attended a seminar at Google held by Lee during the internship. He was impressed by the way “Lee taught us basic skills in business presentation”.

From 1996 to 1998, Lee was president of Cosmo Software, a subsidiary of Silicon Graphics Inc, responsible for several product lines and the company’s web strategy. Before that, Lee spent six years at Apple Inc, leading an interactive media group.
Before his business career, Lee used to be an assistant professor at Carnegie Mellon.
 

Google’s Greater China chief to step down

Google’s president of Greater China Kai-fu Lee wrote in his blog Friday that his next step is to create a “technology miracle” with young Chinese after he leaves the company in mid-September.
Shortly after the company announced his resignation Friday, Lee explained in his blog on sina.com that he left to make up for a regret of his life.
“I have no regret with Google now, but I have a regret with my life that needs to be made up for,” Lee wrote. “I want to pass on my experiences in technology and business management to the young Chinese.
“My next step is to create a technology miracle with the youths in China,” he wrote. “I want to use my initiatives to land a job that can control the whole picture.”
Google China said in a statement Friday that Lee is to step down from his post in mid-September and start his own business in Beijing.
Lee left Microsoft to join Google in 2004 and led the company’s expansion in China.

Alan Eustace, Google’s senior vice president for engineering, said Friday Lee helped the company make apparent progress in service quality and quantity provided in China.
He had also recruited many outstanding engineers for Google, Eustace said.
Lee’s engineering responsibilities would be taken over by Boon-Lock Yeo, director of the company’s Shanghai engineering office. Vice president John Liu, who currently heads Google’s Greater China sales business, would take on Lee’s business and operational roles.
Lee was born in Taiwan in 1961. He also worked for Apple Inc. before joining Microsoft.

Rio suspends iron ore talks with China

Iron ore suppliers and China have broken off price talks and it is unclear when they will resume, an executive of Rio Tinto Ltd., which is negotiating for the suppliers, said Friday.
The talks on supply contracts for the supply year that began July 1 are deadlocked over how deeply to cut prices following two years of sharp increases.

“At this point in time we’re not negotiating,” Sam Walsh, chief executive of Rio’s iron ore business, said in the western Australian city of Perth. He said talks might resume. “I expect they will, but I don’t know when.”
China, the world’s biggest steelmaker, is pressing for price cuts of up to 40 percent following two years of increases totaling more than 100 percent. Major suppliers agreed to a 33 percent cut with Japanese and Korean steel mills this year.
Walsh said that without a contract, Chinese mills are buying iron ore at prices “based on the benchmark” set in talks with other customers this year. The other major suppliers are BHP Billiton Ltd. and Brazil’s Vale SA.
Prices could be changed retroactively to July 1 if Rio and the Chinese steel industry association, which is negotiating for the country’s mills, reach an agreement.
Tensions over the talks rose when four Rio employees were detained July 5 and later charged with bribery and commercial espionage. Walsh noted that case was proceeding but did not say the suspension was connected to it.
A smaller Australian producer, Fortescue Metals Group, agreed August 20 to supply iron ore to China in a deal that Beijing said set a benchmark for prices.
But Rio said the deal would have no effect on its talks.

China Everbright gets ADB funding

China Everbright International Ltd, a waste treatment project developer, got a $200 million-loan from the Asian Development Bank (ADB) yesterday to fund its waste-to-energy plants in the country.
The company will use the money to build power plants in second-tier cities across the Yangtze River Delta, Pearl River Delta and the Bohai Rim Region, Philip Fan, general manager of China Everbright International told a press conference yesterday.
The loans will have a maturity of up to 10 years. It is ADB’s first loan to finance private-sector municipal solid waste management project, the bank said in a statement.
“Waste-to-energy processing with clean technology is the most effective method of treating municipal solid waste since it slashes waste volumes by 90 percent and eliminates methane gas emissions from the waste treatment process,” said Hisaka Kimura, investment specialist in ADB’s private sector operations department.
“Furthermore, waste-to-energy technologies substitute for fossil fuels by generating electricity and heat in the incineration process,” said Kimura.
China has set a long-term target to increase the amount of municipal waste used in waste-to-energy generation from 1 percent in 2002 to 30 percent by 2030, said the ADB statement.

The country has become the world’s largest producer of municipal solid waste, generating around 148 million tons each year at present, which is expected to grow at 8 to 10 percent annually.
Nearly half of such waste is untreated and dumped in unsuitable landfills, meaning many urban poor, especially those living near the landfills, are exposed to severe air and water pollution, as well as to the threat of infectious diseases, it said.
“Our hope is that by working together with ADB, China Everbright International will not only be able to contribute significantly to waste-to-energy development in China but to its use in other ADB member countries as well,” said Fan.
ADB will also provide a technical assistance grant of up to $653,000 from its clean energy fund to evaluate the performance of the plants and communicate the lessons learned to municipal governments around China and to other ADB developing member countries to encourage wider use of clean waste-to-energy technologies.
The Hong Kong-listed China Everbright International is one of the first private-sector investors in waste-to-energy projects in China. Currently the portfolio of the company covers three areas, which are environmental protection, infrastructure construction, and property development.
The company is now involved in 30 environmental protection projects in China, with total investment of 10 billion yuan. Among them 26 projects with investment of 6.6 billion yuan have started operation or under construction. 

HNC pays $29.5m for Canadian antimony mine

Hunan Nonferrous Metals Corp (HNC), the largest integral metals producer in China by production volume excluding aluminum, has agreed to acquire a 100 percent equity interest in Canada-based Beaver Brook Antimony Mine Inc (BBAM).
HNC, and its wholly owned subsidiary Gander Antimony Mine Ltd, will pay $29.5 million in cash from internal resources, the Hong Kong-listed company said in a statement late Wednesday.
“Most Chinese mining companies active in foreign takeovers are giant State-owned companies like Minmetals and Aluminum Corp of China. With this deal, we can see a trend that Chinese companies which used to operate mainly at provincial level have also speeded up overseas expansion,” said Peng Bo, an analyst at Guosen Securities.
Acquiring BBAM will strengthen HNC’s leading position in antimony exploration worldwide and increase its profitability in the long run, said Peng.
This takeover also reflects the overseas expansion strategy of HNC’s major shareholder, China Minmetals Corp,which owns a 40 percent stake in HNC.
China’s biggest metals trader, has signed contracts with partners to develop mines in Latin America and build up mills in Russia.
HNC started its overseas expansion in 2006 when it cooperated with Australia-based Compass Resources NL to explore nonferrous metals mines in northern Australia.
Beaver Brook is the only operating antimony mine in North America, and is one of the world’s largest antimony deposits outside China. The 550 tons per day underground mine boasts a high-grade antimony deposit with an expected 10-year mine life.
The Beaver Brook deposit was discovered in the 1980s, and was mined initially for several months in 1996 and 1997. It was reopened in 2008 and since then the mine has been ramping up towards commercial production, according to Energy Digital.
Hunan province in central China, with 9.3 percent of the world’s antimony deposits, holds the largest antimony resources in China. HNC is the biggest antimony producer in China.
Antimony is a rare metal used extensively in the production of chemicals that are utilized to infuse plastics, textiles, rubber, and other materials with flame retardant. 

Lithium on Galaxy list of projects

 
Galaxy sold a 19.9 percent stake to Chinese private investment firm Creat Group Co. [Agencies]

Australian lithium start-up Galaxy Resources will raise A$50 million ($44 million) to invest in a lithium carbonate project in China, making it the country’s largest lithium carbonate producer after it starts production next year.
The new lithium carbonate facility will transport the element from Western Australia mines and process it in Zhangjiagang, a port near Shanghai, to meet booming demand for lithium-ion batteries in China and overseas, Craig Readhead, chairman of Galaxy, told China Daily at a signing ceremony yesterday.
“We expect to double its annual production capacity from 170,000 tons a year in a few years,” he said.
The deal is part of a recent move by Galaxy and Beijing-based private investment firm Creat Group, which last month agreed to inject A$26 million in equity financing and commit A$130 million in debt financing for a 19.9 percent stake of Galaxy and get the company’s lithium out of the ground.
RZB Austria will take the lead in financing A$130 million, said Sun Yimin, vice-president of Creat Mining Investment Ltd, a subsidiary of Creat Group.

He added that the venture would also include a lithium concentrate facility near the world’s second largest lithium mine in Western Australia, in which Galaxy will invest about A$68 million.
Exploitation of the mine will begin later this year.
The lithium carbonate facility in China will sell 40 percent of its output to the Chinese market, and the rest will go overseas, mostly to Japan and South Korea, Sun said.
“We’ve already got orders at 220,000 tons of lithium carbonate, of which Japan’s Mitsubishi Corporation ordered 5,000 tons,” he said. “The supply can’t meet the demand.”
Lithium carbonate is used in lithium-ion batteries, which are mostly used for mobile phones and electric cars. It is a booming industry in a world desperate for alternative energy sources.
Sun said the global annual demand for lithium carbonate could triple to 300,000 tons by 2020, from the current annual demand of 110,000 tons, with a 15 percent growth every year. Electric cars will account for one third of total lithium capacity.
China has a huge demand for lithium carbonate, standing at 25,000 tons a year.
Chinese electric car maker BYD said this week US billionaire Warren Buffett intends to raise his stake in the company, while Japan’s NEC Corp will use part of its planned $2 billion fundraising for lithium-ion batteries.

Taiyuan seeks Australian iron, nickel investment

Taiyuan Iron & Steel Group, China’s biggest stainless-steel producer, is looking to invest in iron ore and nickel resources in Australia and other countries, Chairman Li Xiaobo said.
“We are chasing some iron ore projects as well as nickel,” Li said in an interview in Shanghai, declining to give details. “So far we haven’t settled on a good target.”
Chinese companies, the biggest buyer of iron ore and nickel, are hunting for steelmaking raw materials as output of crude steel jumped to a record this year.
Baosteel Group Corp, the nation’s largest mill, last month agreed to buy 15 percent of Aquila Resources Ltd, an Australian iron ore and coal company.
“We’re seeking overseas development for low-cost and steady supplies,” Chai Zhiyong, vice-president of Shanxi Taigang Stainless Steel Co, Taiyuan’s listed unit, said. Chai and Li made the comments yesterday while attending a conference.
Taigang gained 8.28 percent to close at 8.11 yuan in Shenzhen yesterday.
Taigang, the stainless steel-producing unit of Taiyuan Group, may increase output by 34 percent to a record 2.4 million metric tons this year as the government’s stimulus spending spurred demand and bolstered prices, Chai said on Wednesday.
Crude steel output in China jumped 13 percent in July to a record as the nation’s $586 billion stimulus package increased demand from builders and carmakers.