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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.

Pacific Securities sees 2009 profit up 162%

Pacific Securities, a national comprehensive securities company of China, on Friday forecast its net profit in 2009 would grow 162 percent from a year ago.
In a statement to the Shanghai Stock Exchange, Pacific Securities said its net profit for last year would tally around 405.35 million yuan ($59.44 million), and earnings per share would be about 0.27 yuan.
The rise in the corporation’s profit was attributed to the economic rebound thanks to the country’s stimulus package, plus a recovery in capital market.
Shares of Pacific Securities opened lower at 16.56 yuan per share on Friday compared with the previous closing of 16.67 yuan per share despite the profit gains forecast.

McDonald’s to invest 25% more capital in China

McDonald’s Corp, the world’s largest hamburger chain, said it expects to boost its capital investment in China by about a quarter this year to tap the growth of the world’s third-largest economy.
“We expect to increase our capital investment by 25 percent over last year,” said Kenneth Chan, McDonald’s China CEO, during the launch of a new marketing campaign on Friday.
“We continue to be extremely bullish about our business in China and will continue to invest in opening new restaurants,” Chan said, but declined to disclose the investment amount for 2009 or 2010.
McDonald’s, which competes with Yum Brands’ KFC in the US and China, was planning to open 150 to 175 restaurants in China in 2010, which would lead to the creation of 10,000 new jobs, he added.
The company said it had 1,135 stores in Chinese mainland as of the end of 2009.
McDonald’s is launching a new brand concept called “Make Room for Happiness” to mark the 20th anniversary of the opening of its first restaurant in Shenzhen.
Last week, McDonald’s posted a profit for the fourth-quarter of 2009 of $1.22 billion, up from $985.3 million a year earlier, helped by strength in Europe and a small rise in December sales in the US. It said same-store sales gained 1 percent in December after two months of declines in the United States, where high unemployment and rampant discounting are straining results.
December same-store sales in Europe topped forecasts with a 5.1 percent gain, while the Asia-Pacific, Middle East and Africa region missed analyst calls and were up just 1 percent. Globally, same-store sales rose 2.7 percent for December and 2.3 percent for the quarter, the company said.

Shanghai Zhenhua Heavy Industry profit drops

Shanghai Zhenhua Heavy Industry Co, China’s biggest port equipment maker, said its net profit in 2009 slumped 60 percent to 70 percent due to weak demand brought about by the global economic downturn.
A decrease in the financial assets income last year also contributed to the losses, said the company in a brief statement filed to the Shanghai Stock Exchange Friday.
The company said the result had not been audited, and it would announce specific figures in the annual business report.
The share price of the Shanghai Zhenhua Heavy Industry opened 0.94 percent lower at 9.5 yuan ($1.4) Friday morning.

Hainan Airlines returns to black in 2009

Hainan Airlines Co, one of China’s major airlines, Friday forecast its 2009 profits would return to the black.
In a statement filed to the Shanghai Stock Exchange, Hainan Airlines gave no exact figure of its net profits in 2009.
Hainan Airlines suffered losses of 1.4 billion yuan ($206 million) in 2008, with earning-per-share at minus 0.4 yuan.
The company, based in south China’s Hainan Island, said profit turnaround in 2009 was attributable to recovery of China’s civil aviation industry, falling oil prices and the government’s supportive policies.
Despite its profit rise forecast, Hainan Airlines opened at 6.93 yuan Friday, down 1 percent from the previous close.

BoCom launches insurance business

Bank of Communications Co Ltd (BoCom), the county’s fifth-largest lender by assets, launched its insurance business yesterday, as part of its goal of becoming a full-service financial conglomerate.
The new enterprise, entitled BoCommLife Insurance Co, makes BoCom the first domestic lender to invest in the mainland’s insurance sector.
BoCom will hold a 51 percent stake in the new company while the Commonwealth Bank of Australia will control the remaining shares. HSBC Holdings PLC holds a 19 percent stake in BoCom.
“The move was a critical step forward for BoCom in our efforts to become a financial conglomerate,” Niu Ximing, executive director of the Shanghai-based lender, said yesterday.
According to Guan Huanfei, the newly appointed general manager of BoCommLife Insurance Co, BoCom will increase its capital in the joint venture to 500 million yuan ($73.24 million) from the initial registered capital of 200 million yuan, making it a nationwide insurer.
In addition to Shanghai, BoCommLife will set up branches in Beijing as well as Jiangsu, Zhejiang and Guangdong provinces.
“By sharing the bank’s resources, including its networks, client base, sales channels and IT systems, we will enjoy strong growth potential,” Guan was quoted as saying to Reuters. “We will become part of BoCom’s wealth management strategy,” he said.
Apart from BoCom, other Chinese banks including Bank of China and Bank of Beijing have also obtained approval to invest in insurance firms as part of a broader push by lenders to expand their business portfolios.

China Life forecasts more than 50% profit rise in 2009

China Life, the nation’s largest life insurer, said on Thursday night its net profit is estimated to grow at least 50 percent in 2009 from a year ago.
The sharp increase is boosted by strong gains in investment thanks to the bullish capital market last year, the company said in a preliminary report posted on the website of the Shanghai Stock Exchange before its annual report release.

Panasonic staff continues protest

More than 200 employees blocked the gate of a factory belonging to Panasonic Corporation of China for the fourth day yesterday in a desperate attempt to secure a better severance deal.
Factory managers and the disgruntled workers sat down at the negotiating table at 4 pm yesterday in the hope of finding a solution. At press time, no deal had been reached.
The workers said the action at the factory, which is close to the international airport, would continue. Neither side would predict when the situation might end.

Workers gather outside the Panasonic factory building in Beijing yesterday. [China Daily]
Panasonic Electronic Devices (Beijing) Company runs two production lines at the facility that have manufactured capacitors since 1996. The company told workers it planned to move one of the production lines to Guangdong province because of the high cost of producing parts in Beijing.
The workers were told about the move on Jan 15 and decided to block the gate on Monday as factory managers began asking members of the workforce to volunteer to leave the company.
Posters on the gate said workers were united and demanded the same severance package as the company offered other workers at other factories.
“They did not tell us they were looking for volunteers because they had decided to fire most of us,” said a worker who had been at the factory for 13 years.
He claimed the word “volunteer” was being used but in reality the factory would fire all workers and offer only a small severance package.
“We have worked here for more than 10 years and spent our youth here. Now the factory wants to dismiss us with only 50,000 yuan ($7,323.75),” he said.
The workers stayed at the main gates around the clock and senior executives, including four Japanese managers inside a building, did not visit to talk with them, he said.
“We are not preventing them from leaving. As long as they can give us a clear explanation, they can leave any time,” he said.
The man said workers were worried that, if managers left and the factory was closed, they would not be heard.
“Our demand is reasonable. We want the factory to give us the same severance package as the other two factories which also belonged to Panasonic,” a female worker said.
She said workers at the other factories got 120,000 yuan when the company closed other lines, but Panasonic Electronic Devices (Beijing) Company was only offering 50,000 yuan to workers at the Beijing factory.
She said workers’ salaries of 1,200 yuan a month, in return for 12-hour working days, had not been raised for years.
“We don’t want to lose our jobs, but if we can get money, at least it will be a consolation to us and our families,” she said.
You Nan, a public relations official with Panasonic Corporation of China said the decision to close the production line was made for business reasons.
“It is a normal business change and we are sincere in wanting to talk with the workers,” You said.

She emphasized that workers were not being dismissed but were being asked to volunteer to leave the company.
The initiative will end on Jan 29 and factory managers will consider their next step, You said.
She said the size of the severance package was in line with the law.
“The severance package should be fixed according to the years they worked,” said Wang Fang, director of Zhicheng legal aid and research center for migrant workers.
Wang said, according to the law, the factory should pay workers who worked for 13 years salary for 13 months.