June 13 - China utilized US$42.78 billion in foreign direct investment in the first five months this year, an increase of 54.97 percent from the same period last year, the Ministry of Commerce said yesterday.

The growth was lower than a year-on-year growth rate of 59.32 percent used in the January-April period this year Xihhua reported. The number of newly-approved foreign-funded enterprises shrank 20.95 percent to 11,915 in the first five months of the year.

Utilized FDI in May jumped 37.94 percent from a year earlier to RMB7.76 billion while the number of newly-approved foreign-funded enterprises dropped 10.94 percent to 2,425. (more…)

By Chris Devonshire-Ellis

June 10 - How badly is China’s runaway success affecting its environment? Jonathan Franzen, author of the New Yorker article, “The Way of the Puffin,” travels between Phoenix Arizona and Ningbo on China’s eastern seafront to discover the economic and environmental costs of producing a Puffin golf club cover.

Along the way, he coincidentally comes across a handful of situations that fly in the face of conventional American wisdom over Chinese business practices. Visiting the American company churning out the Puffin – a soft toy producer in Phoenix – he establishes that the supplying company in Ningbo pays their China staff double the going rate. “We want karma in China,” the U.S. managing director says. “And we wanted to pay for perfection.” (more…)

CHICAGO, June 9 - The Chicago Tribune reports that executives of Alfred L. Wolff Inc., a prominent honey importer based in Germany, have been arrested and held by U.S. Immigration and Customs enforcement agents for illegally conspiring to import honey from China.

The honey laundering case is note worthy as it involves apparent criminal activities by American-based, rather than Chinese businessmen in trying to ensure that cheap product reaches the States, in what is regarded as a rising trend of American commercial disobedience towards government imposed anti-dumping measures. In the Wolff case, honey was said to have been purchased from China, shipped to Russia, mixed with Russian honey, and then shipped to Chicago labeled as pure Russian honey - which does not carry anti-dumping penalties. Other countries Wolff have been alleged to have used as secondary destinations to get around the U.S. Department of Commerce’s anti-dumping fees on Chinese honey include Australia, the Ukraine, Poland and Singapore. The origin of honey can be detected by a signature chemical analysis that identifies soil residues within the honey itself, and once nine containers of Russian honey were actually identified as being of Chinese origin, the executives concerned were apprehended and are now being held at Chicago’s Metropolitan Correction Center, though they have yet to be formally charged. (more…)

May 27 - AmCham South China released their annual report business conditions in the Greater Pearl River Delta region last month, stating that business in South China remains excellent (click on picture to download report).

The reports, conducted by AmCham South China in partnership with Hewitt Associates and Dezan Shira & Associates, collected the experiences and insights of 419 international and local companies in Guangdong, Guangxi, Fujian and Hainan according to the chamber’s press release.

“I believe that the most important thing about this report,” said AmCham South China President Harley Seyedin, “is that it is only the broadcast medium for a message coming directly from the international business community.”

Nine out of ten participating companies indicated that they were already profitable, or would be within two years or less, and vast amounts of these profits are reported as being reinvested in China, with approximately 23 percent of companies indicating that they plan to invest in excess of US$50 million in China over the coming three years, and half of that number planning to invest in a US$25 million or more—each—in that same time frame. (more…)

May 16 –The Australian mining group, Rio Tinto, is protesting over what it calls aggressive negotiating tactics after China Iron & Steel Association (CISA) asked its members to boycott the company’s spot sales of iron ore.

In a statement made on its web site, CISA said: “We appeal to domestic mills and traders not to support or take part in Rio Tinto’s spot iron ore sales activities in China.”

CISA, Rio Tinto and BHP Billiton have been gridlocked in price negotiations for months now. Rio is demanding a 65-71 percent price hike compared to what CISA pays for ore from Brazilian miner,Vale.

It is cheaper for Chinese steel makers to transport Rio’s ore from western Australia because it is almost three times closer to China than Brazil.

(more…)

May 13 – The amount of foreign direct investment pouring into China increased by up to 59.32 percent to US$35.02 billion for the first four months of the year, reports the Ministry of Commerce. On the other hand, the number of approved foreign-funded companies decreased by 23.15 percent to 9,490 compared to the same period last year.

China has been implementing new measures to control foreign investment in the country. Recently, it standardized corporate income taxes for both foreign and local companies while also publishing a catalogue to attract foreign investment to high-tech or environment-friendly projects.

Zhang Hanya, director of the Research Institute of Investment with the National Development and Reform Commission, told Xinhua that the figures indicate that China remains the favored destination among foreign investors.

(more…)

May 5 - China’s trade with the Association of Southeast Asian Nations increased to US$54.4 billion in the first quarter of 2008, a 26 percent increase over the same period last year, sources with the Ministry of Commerce reported on Friday.

According to Xinhua, bilateral trade reached US$202.5 billion last year, representing a year-on-year increase of 26 percent and achieving the trade target of US$200 billion three years ahead of schedule.

Besides trade, two-way investment, contracted engineering and labor cooperation between China and ASEAN members have developed rapidly. (more…)

By Andy Scott

WUHAN, April 28 - The Expo Central China 2008 came to a close today in the city of Wuhan, the provincial capital of Hubei province. The third of its kind, the expo is an opportunity for the Central China provinces of Anhui, Henan, Hubei, Hunan, Jiangxi and Shanxi to attract investor attention to a region that has historically lagged in development behind China’s coastal provinces. As investor sentiment has waned for China’s coastal regions where the rising costs of doing business are beginning to force large corporations to rethink their China strategy, the Central China region, and especially Wuhan with its perfectly centered location in China, is looking to take advantage. Long considered a secondary market, the completion of the new, expanded Wuhan Tianhe International airport as well as the continued dredging of the Yangtze downriver is turning Wuhan into destination for foreign investment.

The expo’s theme focused on the region’s belief that industry inside China is indeed beginning to shift, and the main focus of many of the provincial officials at the expo was directing inbound investment from the coast. At the opening ceremony, Vice-Premier Wang Qishan stressed that the region needed further reform and opening-up, stressing awareness of reform, innovation, and the rule of law as keys. (more…)

Fundamental dynamics in understanding RMB purchasing power is key

April 28 - Jack Perkowski of Asimco fame has been in the press a lot recently, not least because of the launch of his new book “Managing The Dragon : How I’m Building a Billion-Dollar Business in China.”

We caught up with him at the YPO event in Beijing last week where he was one of the guest speakers. In his presentation, he told of how he came to China, and began to build his company. In doing so, he made an interesting observation about staffing a business in China. Taking from his pocket a US$100 bill and a RMB100 bill, he then considered the similarities:

* Both are the highest value note in their respective countries
* Both feature previous national leaders on their front
* Both employ similar anti-forging technology with ultraviolet lights, a metal strip and dual colored inks.

Yet, as he pointed out, Americans by and large do not feel US$100 is a lot of money. But Chinese view RMB100 as a lot of money, despite the fact that at current exchange rates, the RMB100 is worth just US$14. (more…)

April 22 - Starbucks plans to open at least 80 outlets in China this year as consumers in the most populous country boost spending.

The world’s largest cafe chain has more than 300 stories in China and plans to hire thousands over the next two years in to support the planned expansion, the company’s greater China president, Wang Jinlong told Bloomberg TV. According to Wang, the company currently has 4,000 employees in China.

Starbucks has long viewed the large potential of the Chinese market with interest, and the improving standard of living in China’s first- and second-tier cities, as well as a growing taste for coffee are both viewed by the company as a large, untapped potential.

According to Bloomberg, China’s per-capita urban disposable income rose 16.2 percent in 2007, the seventh year in a row the number increased by more than 10 percent. (more…)