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Wal-Mart price pressure hurts workers

Wal-Mart Stores Inc’s demand for rock-bottom prices from suppliers in China means some of these companies are forcing their employees to work in sweatshop-like conditions, a new report said on Wednesday.
China Labour Watch said Wal-Mart, which also operates more than 250 stores in China, is failing to pick up on such abuses when it carries out audits of certain suppliers, calling into doubt pledges to source ethically.
“As the world’s largest retailer, Wal-Mart leverages its massive product orders to purchase goods at low prices, and workers suffer the financial burden,” China Labour Watch, a New York-based rights group, said.
Wal-Mart’s China offices referred questions on the report to the United States, where representatives were not immediately available for comment.
Wal-Mart, the world’s largest retailer and with more than 60,000 suppliers worldwide, procures billions of dollars worth of goods directly from China every year.
The company said last year that it would enforce stricter quality and environmental standards for its army of Chinese suppliers.
But in some factories run by Wal-Mart suppliers, China Labour Watch found pay was withheld to workers who did not meet production targets, and employees who were given only poor quality food or accommodation.
In two of the factories, workers were banned from wearing gloves, lest it slowed production, the report said.
“Worst of all, two of the factories have rules forcing workers to lie to Wal-Mart auditors, forcing workers into silence as Wal-Mart turns a blind eye to sweatshop conditions,” the report said.
While China Labour Watch noted that Wal-Mart had “responded enthusiastically” to help factories which do not meet standards, there had been no overall, systematic improvement.
“Wal-Mart has basic standards which it must implement,” China Labour Watch said.
“It has the size and power to be an industry leader, and this will not come from Ethical Standards Programme initiatives alone but also from major change to Wal-Mart’s corporate practices, including increased investment in the audit system and careful review of purchasing practices,” it added.
“The case of Wal-Mart, the world’s largest retailer, shows that corporate codes of conduct and factory auditing are not enough by themselves to strengthen workers’ rights if corporations are unwilling to pay the real price it costs to produce a product according to the standards in their codes.”

Yunnan Copper forecasts profit turnaround in 2009

Shares of Yunnan Copper Co, a copper company restructured from one of China’s State-owned metal refineries, opened 2.31 percent lower at 24.58 yuan ($3.6) Friday after the company forecast a turnaround in annual net profit last year.
In a statement to the Shenzhen Stock Exchange, Yunnan Copper said it expected to turn from a loss of 27.9 billion yuan in 2008 to a net profit of around 360 million to 432 million yuan in 2009.
The company attributed the profit increase to government stimulus plans and rising prices of copper. Its market value amounts to 31.6 billion yuan.

Suning flips the switch on rural expansion plan

Suning Appliance, China’s second largest consumer electronics retailer, is planning to open 500 new stores in China this year, including 200 in urban settings and 300 in rural areas, the company’s chairman said yesterday.
Encouraged by China’s efforts to stimulate consumption of household appliances, Suning is working to “expand its presence in China’s rural areas in 2010″, said Zhang Jindong, Suning Appliance Group’s board chairman.
The Nanjing-based company, a retailer of household appliances, consumer electronics, plus office and telecom equipment, said in the long term it will have “a portfolio of 4,000 stores” tailored to the nation’s low-income regions, said Zhang.
Rural outlets will range in size from 1,000 to 3,000 sq m, as opposed to their city-based sister stores, which will cover 3,000 to 5,000 sq m.
Top brass believe now is the best time to tap rural demand. “Suning will work quickly to expand its retail network into rural areas,” said Zhang.
Last year, Suning opened 200 new stores around the country, increasing its portfolio to over 1,000 stores by the end of 2009. The majority of those outlets were in urban areas.
Suning began targeting rural markets late last year after the central government launched its household-appliance renewal program in August.
According to the Ministry of Commerce, Suning earned 3.09 billion yuan from the program at the end of November, making it its No 1 beneficiary.
During the third quarter of last year, the company’s sales rose 6.32 percent from a year earlier.
Suning will reap an additional 20 to 25 billion yuan from the ongoing program, according to a recent report from Essence Securities.
While the company’s 2009 financial report is yet to come out, Suning officials are upbeat. Zhang predicts sales will grow by 20 percent.
Following a national drop in export volume over the last few years, the government enacted programs to encourage domestic consumption, which added more than 50 percent to GDP growth, the ministry said.
Suning is forecasting China’s consumer electronics’ market will enjoy strong growth for the next 10 years, and market watchers envision a bright future for the company as well.
“Suning’s estimated annual growth will be 25 percent over the next three years,” said Essence Securities.

Passenger vehicle sales peak in Oct

 
The favorable government policies could propel the industry to greater heights next year, said trade sources. [China Daily]
China’s automobile market continued its robust growth in October, with passenger vehicle sales clocking a year-on-year growth of 79.6 percent, and provided enough indications that the country is well on its way to occupy the top perch in the global automobile market.
Sales of cars, sports-utility vehicles, minivans and multi-purpose vehicles touched 923,154 units last month, said Rao Da, secretary-general of China Passenger Car Association on Friday in Shanghai.
During the first 10 months, passenger vehicle sales surged nearly 52.4 percent over the same period last year to 8.08 million units.
“The government’s favorable tax policy and the eight-day National Day holidays spurred sales in October. The robust trend was also aided as vehicle manufacturers produced more popular models during the period and reduced the delivery time,” said Rao.
“We are optimistic that the November figures would surpass that of October as sales normally peak toward the end of the year,” he said.
China’s automobile industry has been growing robustly since the end of last year and is now the most dynamic and promising market in the world.
“More importantly, by the end of November, total vehicles sales in China will surpass the 12-million-unit target, set by the government under its automobile industry restructuring plan of last year, some 25 months in advance,” said Rao.
“We expect full-year automobile sales to touch 13.5 million with a year-on-year growth rate of 44 percent. That in turn, would make China the world’s largest automobile market for the whole year.”

Rao said if the government can continue its stimulus package for the automobile industry, the growth rate for the 2010 could reach 25 percent.
On Thursday, Zhu Hongren, spokesman of the Ministry of Industry and Information Technology, said the government is considering extending the favorable tax policies and the subsidy for automobile purchases in rural regions to next year also. The policies were scheduled to end this year.
On Oct 28, the China Economic Monitoring Center and Sinotrust jointly released the 2009 Third Quarter China Automotive Industry Climate Index and pegged the indicator at 99.6 points in the third quarter of this year (2001=100), up 2.7 points over the second quarter, indicating that the automobile market has started to recover from the downturn.

AMD launches new PC platform brand VISION

Advanced Micro Devices Inc (AMD), the world’s second-largest chip provider, recently unveiled in China its new mainstream consumer PC platform brand, called VISION.
VISION will market the platform to consumers based on what they’ll experience with the computers, instead of on technical features.
By the end of November, there will be 19 notebook models with the VISION logo available in the Chinese market.
Rather than highlighting lots of brand names and technical specifications of individual hardware components, AMD uses VISION as the single brand and offers three levels of capabilities — VISION, VISION Premium, and VISION Ultimate. Their purpose is to simplify its brands.
“We have lots of different stickers on the PCs, and we are replacing them with just one sticker, a sticker that talks about the experience a PC gives,” said Nigel Dessau, senior vice president and chief marketing officer of AMD.
Dessau said the PC industry has overemphasized technical properties of PCs, which make no sense to most consumers. These properties tell how a PC is manufactured, but not what experience a user can get from it. AMD, he said, will try to “talk in the language of the consumer”.
Intel, the world’s largest chipmaker, also simplified its brands in June. It decided to replace a set of derivatives of the Intel Core brand with shorter and less complicated names to make it easier for consumers to choose from different ones.
Experts say that consumers’ needs will play a more important role in the market and that their decisions will be based more on their own needs than technical properties of PCs in the future.

Sybase set to ride mainland 3G wave

Mobile phone software maker Sybase Inc is stepping up the pace of its mobile computing business in China as the country’s 3G industry has started to blossom, a senior company executive said.
The company expects to maintain the 25-percent growth rate it achieved in the last two years in China this year also, said John Chen, chief executive of Sybase.
China has been the fastest-growing market for Sybase in the 38 countries and regions it operates in, he said.
“The 3G era will certainly see more diversified mobile applications, and there’s a lot we can do here. It’s very favorable for us,” Chen said.
Sybase will focus on developing mobile computing business, such as databases, mobile middleware, and overall software infrastructure, in an attempt to take full advantage of mobile commerce, including mobile payment and banking.
“We think that the potential of mobile commerce will be much larger than e-commerce,” Chen said.
China’s mobile middleware and mobile database markets are relatively small, but their growth would be driven by the development of the country’s mobile industry, said Liu Fei, analyst with research firm IDC.
“As mobile carriers further invest in applications and content, demand for mobile software is set to increase, and the pie of related markets will also be bigger,” said Liu.
China is planning to invest up to 58.5 billion U.S. dollars by 2011 to build 3G networks after 3G licenses were issued earlier this year. The 3G industry is also expected to generate 1 trillion yuan worth of demand in the next three years, according to officials of the Ministry of Industry and Information Technology.
Sybase has already started to cooperate with major industry players like Huawei and ZTE, and the three mobile carriers in China. It is now responsible for China Mobile’s transnational messaging infrastructure, through which users can send text messages to 19 countries.
Company officials said they are in talks with the mobile carriers for new cooperation projects.
Database, business intelligence and mobile computing are the three major engines for Sybase sales.
The company recently won a bid for providing China Mobile database products, which the carrier used to source from Oracle, the world’s second-largest software maker. But Oracle still takes up most of China’s database market share, followed by IBM and Microsoft.

Petrobras gets $10b loan from Chinese bank

Petrobras, a Brazilian multinational energy company, signed a 10-year contract on Tuesday for a $10 billion financing from the China Development Bank Corporation, the company source confirmed Wednesday.
The fund would be used to finance the Petrobras Business Plan 2009-2013 and would be made available to the company in several stages, according to Petrobras.
The company said the contracts had been under negotiation since May 2009.
“This funding has become symbolic because of the amount involved and because it represents a new stage for relations between developing countries’ markets,” the company said in the statement.
When the first withdrawal is made, Petrobras said, a long-term agreement on the export of Petrobras oil to UNIPEC Asia, a subsidiary of Sinopec (China Petroleum and Chemical Corporation), would take effect. It forecasts the export of 150,000 barrels of oil a day in the first year, and 200,000 barrels in the nine subsequent years.

Compound rubber imports set to soar

China, the world’s largest rubber consumer, is expected to import 950,000 tons of compound rubber this year, a surge of nearly 71 percent from last year, an industry report said yesterday.
Compound rubber contains 99 percent natural rubber and although prices are a few cents higher, it only attracts a 5-percent import duty in China versus up to 20 percent for natural rubber.
“Compound rubber import volume was increasing in recent years because the Customs tax was lower than (that on) natural rubber,” China’s Rubber Research Institute said in a report prepared for an international conference in Ho Chi Minh City, Vietnam.
Compound rubber now competes with natural rubber in the export market, with many dealers in Thailand, Indonesia and Malaysia aiming to produce more to take advantage of China’s import duty structure.
China bought compound rubber mainly from Malaysia, Thailand, Indonesia and also the United States.
The country imports about half of what it consumes and expects demand for rubber to rise 8.5 percent to 6.4 million tons in 2010 because of strong growth in the country’s auto sector, according to the China Rubber Industry Association.
Of the total demand, natural rubber will be 2.8 million tons and synthetic rubber will be 3.6 million tons, according to the association.
“The development of the auto industry is still the main driver for the development in China’s rubber industry,” said the association president Fan Rende earlier this year.
The Hainan-based research body also said that auto production was projected to rise to 12.5 million units this year from 9.1 million in 2008.
Domestic tire demand could help offset a drop in China’s tire exports in 2010 and 2011, especially after the United States slapped new duties – a move which could also cut demand by 300,000 tons.
In September the United States imposed an additional duty of 35 percent on Chinese tires, besides an existing 4 percent duty. The extra duty would fall to 30 percent in the second year and 25 percent in the third year.
China has been a rare bright spot in the struggling global auto industry as government incentives spurred an increase in demand. China overtook the United States as the world’s biggest automaker in January.
China consumes 16 percent of the world’s natural rubber.
It imported 1.68 million tons of rubber in 2008, up 2.07 percent from the previous year, in which nearly half came from main producer Thailand, according to Customs data.

Shanghai Deer Jet gets nod to fly business jets

Shanghai Deer Jet Co, a subsidiary of HNA Group, China’s fourth largest commercial aviation group, has won permission from the Civil Aviation Administration of China (CAAC) to provide business aviation services, the Oriental Morning Post reported today.
Business aviation service is attractive to high-end customers, as it allows them to decide their own routes and departure times and can cover remote areas, compared with general commercial flights. The service is still administered by a uniformed aviation safety system, though.
Deer Jet owns two Hawker 800XP jets, which it will use for high-end customers. The jets provide meeting areas, bars, restrooms, sound equipments, DVDs, satellite telephones and Internet access, which enable passengers to work during the flight.
In recent years, many airline companies have eyed the great potential in the business aviation market.
But China’s business aviation industry is still in its infant stage. Only four domestic companies — Deer Jet, Air China Business Jet, Shanghai Airlines, and Shandong Rainbow Business Aircraft Co — operate business jet services with no more than 30 planes, mainly in Beijing and Shanghai, and over 80 percent of the flights are on international routes.
Most of the companies have mediocre performances and some have seen long-time losses.
Ma Xulun, general manager of Shanghai-based China Eastern Airlines, China’s third largest carrier by fleet size, said they provide aviation services for other companies’ jets, but have no plan to introduce their own business jets within the next two years.
China Eastern is set to increase its Shanghai market share to 50 percent from the current 35 percent after taking over Shanghai Airlines. Shareholders of both companies approved the proposed merger last month.