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Honda, Guangzhou Auto mull expansion
Honda Motor and Guangzhou Automobile may expand the capacity of their China plant by a third next year to meet robust demand in the world\’s largest market, chairman of the Chinese automaker said on Thursday.
The No 2 Japanese automaker and its partner operate two plants making Accord, City Odyssey and Fit models in south China, with a combined capacity of 360,000 units.
"Our second plant is smaller with only 120,000 units. We may double the capacity next year," Zhang Fangyou told Reuters on the sidelines of an industry forum in Shanghai.
A spokesman with Honda\’s China operations said the expansion plan is under consideration but no final decision has been made so far.
China is a major bright spot this year as the government\’s policy incentives bolstered automobile demand, making the country a safe heaven for global automakers, battered by a sharp-than-expected industry downturn.
Volkswagan AG had in September unveiled a plan to invest 4 billion euros ($5.99 billion) in China till 2011, while Ford Motor, a conservative player, also broke ground for its third China plant recently.

Car sales in China jumped 75.77 percent to 946,400 units in October, with sales in the first 10 months up 45.18 percent at 8.19 million units, official data showed.
And positive signs that Beijing may continue its efforts to boost domestic consumption, including automobiles, are raising hopes for another bumper year ahead.
A report by China\’s Ministry of Industry and Information Technology indicated last week that the government might extend some of the existing incentives, including cuts in sales tax for small cars, as well as introduce other steps.
Dong Yang, secretary general of the China Association of Automobile Manufacturers, told reporters on Thursday that he expected China\’s overall vehicle sales, including trucks and buses, to grow 10 percent in 2010 if the government renews its tax incentives.
Guangzhou Auto, China\’s sixth-largest, expects its sales to grow 12 to 13 percent this year and to maintain a double-digit growth rate next year, Zhang said.
It is scheduled to start building a joint venture plant with Fiat at the end of this month with completion scheduled for 2011, Zhang added.
The expansionary moves are expected to boost Guangzhou Auto\’s annual production capacity to more than 1 million units in 2011 from its current 800,000, Zhang added.
Guangzhou Auto also operates a car venture with Toyota Motor in south China.

Alstom seeking China partners for CCS projects

French power and rail infrastructure provider Alstom is seeking partners to develop Carbon Capture and Storage (CCS) applications in China, Philippe Joubert, president of Alstom Power said yesterday.
"Alstom is in discussions with several Chinese partners for developing CCS applications in the country," Joubert said in Wuhan, the capital of Hubei province, where Alstom unveiled its new boiler factory.
China is the largest market for boilers used in coal-fired power plants, which are a major source of carbon dioxide (CO2) emissions. The nation\’s power plants have been blamed for emitting more CO2 than the world average because they depend heavily on coal energy and use small power generators.
Beijing has already taken several measures to reduce CO2 emissions, including the use of CCS technology in power plants.
China\’s power giant Huaneng Group has already started CCS pilot projects last year. The group\’s Greengen zero-emissions project head said they will "start construction in 2014 and complete the work and start operations in 2016".
The Alstom Power president said full-scale commercialization of CCS would be available to market by 2015. In the past few years, Alstom has devoted efforts to develop 10 CO2 capture demonstration projects in six countries.
But wide application of CCS is controversial because the technology itself is cost-intensive. The Alstom chief, however, shrugged off the concerns and said, "the cost of CCS technology is declining very quickly and is now already comparable with that of wind energy".

Alstom Power has been keen to develop clean energy solutions. Its boiler technology in new supercritical and ultra-supercritical coal-fired plants is said to achieve 50 percent efficiency, according to the company. An efficiency improvement of 1 percent equals 2 to 3 percent less CO2 emitted.
The new energy-efficient factory will save 6,000 tons of CO2 each year and is the company\’s largest boiler manufacturing site in the world as well as exporting base and research and development center in the Asia Pacific.
With a capacity to produce 600 megawatts supercritical boilers and 1,000 megawatts ultra-supercritical boilers, the factory will export one third of its products to the rest of the world.
Alstom bought a 51-percent stake in Wuhan Boiler Company, a State-controlled company that\’s been making boilers for power plants for 50 years and is expected to play a key role in the country\’s large-scale construction of energy-efficient, low-emission thermal power plants.
Alstom designs, manufactures, supplies, installs and services more than 25 percent of the world\’s installed power generation base.

BMW to hike China output

BMW\’s jointventure with Brilliance is expected to produce 75,000 from next year.[China Daily]?
German luxury carmaker BMW Group announced yesterday in Beijing that it planned to increase production capacity in China to further tap the growing luxury vehicle market in the country.
Friedrich Eichiner, a BMW board member, said the group would have a total production capacity of 300,000 cars a year in the long term, without revealing a specific timetable.
At present, BMW\’s joint venture with Brilliance China has a 41,000-unit plant in the northeastern city of Shenyang.
The factory\’s capacity will be upped to 75,000 units next year, Eichiner said.
The two parent companies will also spend more than 5 billion yuan to build a new factory in Shenyang with a planned annual production capacity of 100,000 cars by 2016 or 2017, according to BMW executives.
In the first stage, the new facility will have an annual capacity of 25,000 units in 2012.
BMW\’s aggressive expansion plan comes on the back of robust growth in China sales in the first 10 months of this year.
The group sold a total of almost 72,000 BMW and MINI cars on the Chinese mainland from January to October, up 36.7 percent when compared with the same period last year.
In October alone, the group\’s sales on the mainland surged 81 percent to an all-time monthly record of 9,558 units.
BMW\’s major competitors, Audi and Mercedes-Benz, also enjoy strong performance in China.
Audi, the current leader in China\’s luxury car market, moved nearly 110,000 vehicles on the mainland in the first three quarters of this year, an increase of 20 percent. Mercedes\’ saw sales increase by 52 percent, to 44,300 units, during the same period.

Christoph Stark, president and CEO of BMW Group Region China, said that China\’s luxury car market has tremendous growth potential, driven by the country\’s steady economic growth.
"The premium car segment will grow faster than the overall vehicle market in China," Stark said, predicting that the premium segment will account for 7 to 8 percent of the total passenger car market in the years to come from less than 5 percent now.
BMW\’s expansion plan will also include an engine plant in Shenyang, but it has not provided specifics for the project.
The BMW-Brilliance joint venture, formed in 2003, now produces the 3 and 5 Series sedans.
Eichiner said the venture will launch the all-new 5 Series sedans with an extended wheelbase, specially designed for Chinese buyers, at the end of next year,.
Audi and Mercedes too have car plants in China with local partners.

China reaffirms principle of probe of Rio Tinto case
China will handle the Rio Tinto case according to Chinese law and the China-Australia Consular Agreement, Chinese Foreign Ministrys pokesman Qin Gang said at a regular news briefing on Thursday.

Stern Hu, head of Rio Tinto\’s Shanghai office, was detained by Chinese authorities in early July along with three other staff on charges of spying and stealing state secrets.

Australian Foreign Minister Stephen Smith had raised concern recently on the two-month extension of Chinese investigation on this case.

In response to such concern, Qin said the Rio Tinto case would be handled by Chinese judicial organs in accordance with Chinese law and the China-Australia Consular Agreement.

Samsung recalls 32,000 refrigerators in China
Samsung China announced Tuesday it was recalling 32,000 of its RSH1STPE1?￠RSH1STSW1?￠RSH1VTPE1?￠RSH1VTSW1?￠RSH1ZLAW1 and RSH1ZTPE1 refrigerators sold in China, according to www.qq.com.
The two-door freezers, imported from South Korea and made between June 2007 and May 2008, reportedly have defrosting defects which could lead to a short circuit Engineers will be sent to households and make repairs for free.
The recall starts Tuesday.

Air China set to fly high, chief says

Kong Dong

He is the son of a legendary revolutionary couple who were in the thick of the action when New China was founded 60 years ago. Kong Dong is a man with his eyes on the horizon as he steers the country\’s flag-carrier, Air China, toward high-altitude profitability after the turbulence witnessed due to the global economic slowdown.
Kong, 61, told China Daily yesterday: "I have full confidence that we can turn over an exam paper with quite satisfactory scores to our stakeholders, thanks to China\’s economic resurgence and air traffic rebound."
If that happens, it would be a decisive victory for Kong, whose company, with a workforce of 20,000, plunged deep into the red in 2008, registering a loss of 9.2 billion yuan ($1.35 billion). It was a poor year after five years of positive growth ever since the company was listed in 2004.
But the Air China chairman knows that a little turbulence during a long flight is to be expected and that the company is well on course.
Of last year\’s losses, those from fuel hedging stood at 7.5 billion yuan, and a further 1.18 billion yuan was due to investment losses.
"This meant our core businesses – passenger and cargo – were still on a solid footing despite the global economic crisis," Kong said, adding that the setback served as an important reminder to boost corporate confidence and morale.
Some analysts believe Air China is set to become one of the most profitable airlines in the world this year, with major carriers including Lufthansa, Singapore Airlines, All Nippon Airways and almost all carriers in the United States, suffering from losses due to the economic recession.
"But this doesn\’t mean anything and offers no reason for us to be complacent – they are experiencing more difficulties than we are; and in reality, we are lagging the world\’s top carriers," said Kong.
As if to match the country\’s pace in recovering from the global economic slump, Air China posted a net profit of 2.88 billion yuan for the first half of the year. A year ago, it was just 1.13 billion yuan.
Core business operations and fuel hedging gains contributed equally to the higher income, Kong said.
This was in stark contrast to most of the leading international carriers, which have not yet emerged from a drop in business resulting from the economic slump.
Kong said his company\’s performance was in part attributable to its stringent efforts to narrow down capital expenditure, improve aircraft use efficiency, and economize on fuel use by taking steps such as shortening the distance planes take to taxi along the runway.
China reported year-on-year gross domestic product growth in the third quarter of 8.9 percent. National Bureau of Statistics\’ spokesman Li Xiaochao said on Oct 22 that the country would achieve its goal of 8 percent GDP growth for the whole year.
The number of air travelers increased by 20 percent from a year earlier to reach 151 million in the first eight months, according to the bureau\’s statistics.
"Our business in October was good, and November will see surging turnover as international travelers prepare for Christmas. As for December, a traditionally lean month, we\’ve chalked up countermeasures in advance," said Kong.
"So, this is certainly going to be a better-than-expected year to celebrate."

A graduate of mechanical engineering, Kong has decades-long experience in the aviation utility sector. When he took over as chairman of Air China last April, the technocrat turned heads by doing things differently from the aviation industry practice – answering letters of complaint, learning risk-management and preaching best practices.
Through its quality service and being the exclusive carrier to Chinese leaders on their overseas trips, Air China has become a reliable brand for millions of travelers. But Kong said: "If Air China wants to further differentiate itself from others, it needs to improve service quality."
That explains why Cathay Pacific Airways Ltd, Air China\’s Hong Kong partner, is high on Kong\’s mind.
"Cathay Pacific is a model for Air China to learn from," Kong said. "We have started an exchange program (with Cathay) to train our employees in a variety of aspects, including service, marketing, finance and personnel management."
Realizing Air China\’s disparity with the world\’s major air powers, the company has set a goal of developing Air China as one of the global top 10 air businesses in terms of comprehensive strength by the year of 2015, said Kong.
Air China hopes it will be flying high based on its global aviation hub in Beijing, supplemented by its presence in other key cities, company sources said.
It opened a subsidiary in Shanghai earlier this year to strengthen its foothold in the international air traffic center, and launched a Hubei subsidiary this May.

iPhone sets up Apple cart for crazy fans

Cliched undoubtedly, but the early bird did catch the Apple worm and fortune did favor those who braved Friday\’s cold and rain with a trendy gadget called iPhone.
In Beijing, a large crowd gathered at The Place shopping center many hours before the much-hyped iPhone was officially launched on the Chinese mainland.

Liu Xinling shows off the certificate that she got for being the first person to buy an iPhone online on the Chinese mainland on Friday. Wang Jing?

A few hundred people queued up at The Place, with Henan province native Zhi Xianzhong in the front. The 32-year-old became the first person to get the iPhone from China Unicom, Apple\’s partner, at 7 pm after weathering the cold and rain for 7 hours and 40 minutes.
The handset, which Zhi said would be a gift for his wife, came with a certificate.
Liu Xinling, 25, too got a certificate from China Unicom, for she was the first to book a handset online at 00:02 am on Oct 1.
"I kept refreshing the Unicom website continually before logging on to book the handset," she said.
An iPhone 3GS handset (without connection) costs 4,999 yuan ($733), more than half of the country\’s per capita urban disposable income, and about 25 percent more than what it sells for in Hong Kong.
But the high price did not scare away iPhone fans, who love the gadget for its "creative functions, breathtaking design and faster speed".
Hundreds of fans cheered when the Apple store in Sanlitun opened sales at 8 pm. Zhao Xin, 31, a salesman, became the first to buy the iPhone from the store.
With pop music, flashlights, fashionistas and shoppers, the Sanlitun store became a big party venue for buyers. The store had made arrangements for its staff to help buyers install software and know more about it. The proud new owners also got help from the slides in the three giant iPhones hanging from the glass walls.
Soon, Apple fans were seen "helloing" each other and making plans for celebrating their luck.
Li Liang, 25, bought an iPhone even though he was not happy that the official handset was not equipped with WiFi.
"I know a lot of fans are like me. They have a touch of iPod, which has WiFi, and they buy an official iPhone that has some localized functions," Li said.Luo Baohuang, a public relations manager, and a few iPhone fanclub members even threw a party at a restaurant to celebrate the occasion after they bought the official iPhones online. Luo, 29, has been using Apple\’s products for about eight years.
iPhone\’s official debut on the Chinese mainland has encouraged fans a lot, he said. "We no longer have to go to Hong Kong or the US to buy them," Luo said.
The launch, however, has put users of unauthorized iPhones in a dilemma. It is estimated that the mainland has 700,000 to 1 million unauthorized iPhone users, who smuggled the sets from overseas.
Wang Hongliang is glad that she resisted buying a pirated set. "An unauthorized set has no guarantee of after-purchase service, and you need to re-install its system from time to time, so I waited for the official one," she said.
Some fans are considering giving up their unauthorized phones and buying a "real" one because it has all the functions, Huang Luxia, a 25-year-old white-collar worker, said.
Apple first held talks with China Mobile in 2007 to introduce iPhone on the mainland. But it later turned to China Unicom, which adopted the 3G standard that Apple\’s iPhone 3G and iPhone 3GS are compatible with.
Experts said China\’s ban on the WiFi function in cellphones, the amount of handset subsidy, and Apple\’s insistence on running its store in China were the major obstacles that had kept iPhones out until Friday.
China Unicom wished the stylish handset to boost its 3G service, launched earlier this year, and help attract elite users from rival China Mobile.

IBM grows its consulting services

The IBM Building is a well-known fixture on Madison Avenue in New York City. IBM Global Business Services this year opened six new offices in Shenyang, Wuhan, Nanjing and other Chinese cities. [Agencies]

Most companies tend to reduce their spending during the economic slowdown. But US technology giant International Business Machines (IBM) seems to regard the downturn as a critical time to invest.
Marc Chapman, general manager of IBM Global Business Services for the Greater China Group, said the demand for consulting has actually increased during the current economic slowdown, since many companies in bad times tend to focus more efforts on integrating their existing operations.
"Many companies were just building up their scale during the past few years when markets were growing," he said.
"But the economic slowdown is giving many companies opportunities to turn their efforts to integrating infrastructure and information technology to get more productivity, which allows them to create a foundation for the next cycle of business growth," Chapman said.
IBM Global Business Services this year opened six new offices in Shenyang, Wuhan, Nanjing and other Chinese cities – nearly doubling its number of offices in the country.
The company in August also opened a new Analytic Solution Center in China to help local companies build smarter business systems and drive improved decision-making strategies.
Chapman said China still has great potential to grow, since most provinces each boasts a population that is much bigger than that of a European country.
He said many Chinese companies such as Huawei Technologies and ZTE are growing to be international in size.
"We are totally convinced that by 2020, there will be as many Chinese companies on the Fortune 500 as US companies," Chapman said.
After phasing out hardware manufacturing in the past decade, IBM has been refocusing on software and information services.
In 2002, the company acquired PricewaterhouseCoopers Consulting, making a foray into the business consulting business.
Last year, 82 percent of IBM revenues came from software and service sales. Revenues generated from its Global Business Services segment were $19.6 billion, roughly 19 percent of IBM\’s total revenues.
In its third-quarter report this month, IBM announced a 14 percent increase in net income, beating earlier estimates from analysts.
The company also improved its profit margin in the service business by shifting more work to emerging markets such as China.
Chapman said IBM sees tremendous opportunities in China.

"We have already started to move workloads to China. That will give us an extra advantage when we grow in the country," he said.
China\’s 4 trillion yuan ($586 billion) economic stimulus package, which was announced late last year, is expected to invest huge sums in infrastructure projects such as railways and ports.
That, Chapman said, gives IBM a great opportunity to bring its "Smarter Planet" strategy to China.
IBM earlier this year announced the Smarter Planet campaign, which will use information technology to help companies and government organizations run more efficiently.
"Using the Internet and technology, we can solve traffic problems or water or population problems," Chapman said.
Chapman said that during earlier technology booms, a period of "infrastructure build-up" would be followed by a crash.
"But right after the crash, there was a sustained period of innovation to use the infrastructure that had been built," he said.
Chapman said the crash of the computing and communications sectors is now going to lead to a sustainable period of growth that will capitalize on that infrastructure.

Danish firm grows R&D for diabetes

A Novo Nordisk worker checks vials of insulin at a company factory in Kalundborg, Denmark. Novo Nordisk is investing more in China to serve a population suffering higher rates of diabetes. [Bloomberg]

With 86 years of history and around three-fourths of its business engaged in diabetes care, Novo Nordisk maintains more than 50 percent of the insulin market by volume around the world, thanks to its focused strategy.
The Denmark-based company said that it will continue this approach in China, which is its fastest-growing market.
"We have made a long-term strategic commitment to China, from building up our organization for sales and marketing to investing in local manufacturing and research and development," said Lars Rebien Sorensen, president and CEO of Novo Nordisk.
Sorensen told China Business Weekly that the company\’s efforts in China are focused on diabetes, given poor public awareness about this chronic disease.
Educating medical professionals and patients is a priority, Sorensen said.
A diabetes-focused sales strategy helped the healthcare company obtain a positive performance despite the global economic downturn.

Lars Rebien Sorensen?

Novo Nordisk generated year-on-year sales growth and operating profit increases of 12 percent and 38 percent, respectively, last year. The company has reported 29 consecutive quarters of double-digit sales growth.
Sorensen said the figures in China were even higher, citing 30 percent sales growth over the last few years.
"We focus on areas where we have leading expertise, so we are best able to develop new products and services. Our focus is our strength," Sorensen said.
Novo Nordisk established a research and development (R&D) presence as a long-term growth strategy in the competitive pharmaceutical industry.
Novo Nordisk in 2002 established the first R&D center in China built by an international pharmaceutical company. The center in Beijing was also the first facility run by Novo Nordisk outside its headquarters in Copenhagen, Denmark.
Value chain
The 70 professionals and 11 staff members focus on research and manufacturing capabilities as an important segment of the company\’s worldwide value chain, Sorensen said. The company runs two similar facilities in Denmark and the United States.
Novo Nordisk plans to double its activities at the Beijing R&D center over the next three years, making it a larger recipient of Novo Nordisk\’s global annual R&D investment of $1.5 billion.
The China R&D center also partners with Chinese research institutes. The latest partnership is with the Shanghai Institute for Biological Sciences (SIBS) of the Chinese Academy of Sciences.
The SIBS-Novo Nordisk Translational Research Center for Pre-diabetes in Shanghai will investigate new ways of predicting, preventing and treating diabetes with diagnostic tools, medicines and lifestyle changes.
"The focus is on the early stages of the disease," said Wu Jiarui, vice-president of SIBS and director of the new center.
"We hope we will discover bio-markers that will enable us to intervene early in the development of obesity and diabetes, as well as identify new drug targets and proteins relevant to the prevention or treatment of obesity and diabetes," Wu said.
Novo Nordisk was founded in 1923 by a doctor who was the first to bring insulin to Europe to save the life of his wife.
"Diabetes is a very complex disease, and there is still no cure. We are proud to be at the forefront of developing new approaches to address the unmet medical needs of people living with diabetes," said Sorensen, 55, a 27-year veteran of the world\’s largest insulin maker.
The disease was first seen in developed regions such as the United States and Europe and is now spreading in developing countries such as China.
Among emerging economies, China has the second-largest number of diabetes patients after India.
More than 40 million Chinese people suffer from diabetes, and the number is likely to double by 2025.
"The need is unfortunately becoming larger and larger. An increasing number of people will need medication and education," Sorensen said.
Focus on expansion
Novo Nordisk set up a manufacturing plant in Tianjin in 1996. Late last year, the company announced an investment of $400 million to establish a new facility next to the old one.
Covering 880,000 sq m and producing insulin cartridges for Chinese and global markets, the new plant is the largest single investment outside Copenhagen.
The facility will be completed by 2012, creating 500 new jobs, according to the company.
Novo Nordisk has built a sales team with more 1,600 staff members – three-fourths of its 2,200 employees in China. The company will expand its force by 20 percent in coming years.
"We are expanding in China in all aspects to meet the growing needs for quality diabetes treatment." Sorensen said.
China\’s pharmaceutical market grew at a compounded annual rate of 22.6 percent from 2003 to 2008, reaching $24.5 billion in sales in 2008, according to IMS, a US-based international pharmaceutical market research company.
According to IMS, China already is the world\’s sixth-largest pharmaceutical market and will become the third-largest market by 2011.
Such a large market is driving drug makers, including Novo Nordisk\’s competitors such as Bayer, Eli Lilly and Sanofi-Aventis, to gain a larger share.
"We have two key advantages. One is the large scale of production, which means that we can make insulin at a low cost," Sorensen said.
"The other advantage is our R&D leadership that makes it possible to develop new and modern drugs," he said.
Novo Nordisk is the only drug maker with a full portfolio of short-acting, mixed and long-acting insulin analogs, he said.
China is the third-largest market for Novo Nordisk after the United States and Japan.
Education outreach
Novo Nordisk also has been focusing on public and professional education in China as a way to increase awareness and the company\’s influence in this sector.
So far, the company has helped train more than 150,000 healthcare professionals in China.
Its public education and community initiatives include educational bus tours in rural areas.
The company also supports high-level international meetings such as the Diabetes Leadership Forum, which was held in New York in 2007 and in Moscow last year.
This year\’s meeting, hosted by the Chinese Ministry of Health and the World Diabetes Foundation, will take place in Beijing later this month.

Novartis aims to quintuple China sales
Swiss pharmaceutical giant Novartis AG has said it aims to quintuple China sales and be one of the top 5 transnational firms in the domestic over-the-counter (OTC) drugs market by 2014.
The company, which is planning to sell 200 million yuan worth of OTC products in China this year, said it is looking at sales of 1 billion yuan in five years\’ time.
"We are going to expand in the China market by releasing over 20 OTC drugs by 2011," said Warren Jiang, head of Novartis\’ OTC division in China.
The company now has three OTC drugs in China, but most of its OTC sales come from only one drug, Voltaren Emulgel, an anti-inflammatory pain-relief gel.
Although Novartis is ranked 4th in the global OTC market with annual sales of $3 billion, its market share in China is small as it entered the OTC market only in 2007.
Novartis may also acquire other local firms to better compete in the Chinese OTC market, Jiang hinted.
"Mergers and acquisitions are our important strategies in the OTC market, especially here in China," said Jiang.
"Now, we are in active talks with potential candidates," said Jiang, adding that its rival Bayer\’s acquisition of Chinese brand White & Black has enhanced the company\’s confidence about such opportunities in the country.
Although many home-grown Chinese pharmaceutical companies are less willing to sell their businesses due to the improved economic conditions, Jiang said he was positive about an M&A deal in China.
If such a deal is reached, Novartis may further deepen control in the China market and establish more channels for its OTC business.
The company has set channel development as its prime goal this year. It would triple the number of sales representatives and expand distribution channels, which now cover 90 cities, this year, the company had said earlier.
Novartis is also keen to introduce more OTC drugs, which have gained considerable popularity in Western markets, into China, Jiang said. The key drug categories include analgesics, cough, cold, skin care and smoking-cessation medicines.
Jiang said Novartis would go in for a publicity blitz for Voltaren Emulgel, its global blockbuster, starting next year to further boost its sales in China.
"China has been a very attractive market," said Jiang. "For us, to develop in China is more important than making profits."
The Chinese OTC market, worth anywhere between 100 billion ($14.65 billion) and 200 billion yuan, is growing by 18 to 20 percent annually, said Peng Haizhu, an analyst with Huatai Securities. The bigger pie may attract more players into the OTC market, he said.