‘Questionable’ Esso gasoline under probe
An investigation has been launched into petroleum giant Esso, after accusations that their gas stations in the southern province are selling substandard gasoline that causes cars to malfunction.
Li Xiangming, deputy director-general of Guangdong provincial committee of economy and information industry, said his committee is giving great importance to the case and has mandated that relevant departments launch a thorough investigation.
“Guangdong, which has registered more than 6,000 finished oil companies, always spares no efforts to fight illegal gas stations and the trading of fake or substandard quality oils,” Li told local media yesterday.
Li had suggested that all the Esso gas stations temporarily close for self-inspection on Monday.
But all the 18 Esso gas stations in Guangdong province had resumed their business yesterday after a day’s business suspension for self-inspection on Tuesday.
Zheng Yuqing, a press executive from ExxonMobil’s Guangdong company, insisted that Esso’s finished oil has no problems. ExxonMobil is the parent company for Esso.
But she refused further comment.
Officials had received several complaints from drivers that their vehicles stopped functioning properly when their car tanks were filled with the alleged substandard oil from the Esso gas stations.
Li’s committee, along with the Guangdong provincial administration of industry and commerce, organized an emergency meeting on Monday night to discuss how to handle the case.
Che Zuobin, a section chief in the publicity department under Li’s committee, said his committee and the Guangdong provincial administration of industry and commerce are now investigating the case.
“We can not force or require Esso to shut down all its gas stations unless they are found to have violated laws and regulations,” Che told China Daily yesterday.
“And we are still collecting evidence and seeking suggestions from the province’s associations of finished oil and relevant departments and organizations,” Che said.
The result of the investigation will be published in about two weeks, Che added.
Hu Yanni, a section chief from Guangdong provincial administration of industry and commerce, said the company will be fined between 50,000 yuan and 500,000 yuan if it has sold finished oil without a license, or if it has sold substandard products.
Hu urged car owners and drivers to continue to complain to administrations of industry and commerce, or the consumers’ council, if they believe they have purchased any product of poor quality. But she denied her administration suggested Esso close its gas stations for self-inspection.
She refused to reveal whether Esso has been granted a license to trade finished oil.
The case has raised concerns from many government departments and the large number of car owners in the province, which borders Hong Kong and Macao special administrative regions.
Some companies and residents who have chosen Esso pumps as their designated gas stations have paid in advance.
ExxonMobil is the world’s largest publicly traded international oil and gas company.
ExxonMobil markets fuels and lubricants under three names: Esso, Exxon and Mobil.
More plug-in stations coming soon
State Grid Corp of China (SGCC), the nation’s biggest electricity distributor, plans to construct 75 electric car recharging stations across 27 cities this year, as part of its plan to support fuel-efficient transportation, a company executive said yesterday.
The plan includes the construction of 6,209 recharging towers, according to the executive who requested anonymity. The specific number of recharging towers planned per station was not revealed.
“The plan, which is a pilot project, is part of our strategy to build a smart grid,” he added, without elaborating.
A smart grid delivers electricity from suppliers to consumers using two-way digital technology to save energy, reduce costs, increase reliability and transparency.
Earlier media reports said China is planning a multi-billion yuan investment in smart-grid construction to increase the capacity of the nation’s power grids.
SGCC, which manages power transmission and distribution in 26 provinces, autonomous regions and municipalities, completed its first electric car charging station in November. The station, covering 400 sq m, cost 5.08 million yuan, the company said on its website.
“It is certainly good news for us,” said Wang Bin, president of Beijing Lithium Energy Investment Co, an electric-car producer. “The improvement in infrastructure will certainly boost the development of the whole industry.”
Cars made by Beijing Lithium have already been put into use in the public transportation system in Tangshan, Hebei province, he said. The company has also worked with the local government to build several pilot recharging stations, he added.
The main challenge for industry planners is selecting a standard. “In my opinion we need to develop a national standard for recharging vehicles.”
China’s electric car industry has undergone accelerated development in recent years, with both domestic producers and foreign companies eyeing the sector.
Thomas Weber, a board member with German carmaker Daimler and responsible for Mercedes-Benz car development, said the company would enter China’s electric car market as soon as charging stations become available.
“We have advanced technologies and reliable products in the electric car segment. Once China has settled the charging issue we will consider introducing our electric cars to the China market,” he said. He also told China Daily that Daimler is seeking to cooperate with domestic industry players in the development of electric car parts.
Over the next decade, between 5 and 10 percent of the German carmaker’s new offerings will be alternative-energy vehicles.
Geely may complete Volvo purchase by May
Zhejiang Geely Holdings, the parent company of carmaker Geely Automobile, aims to sign an agreement to buy Ford’s Volvo unit by Feb 8 and complete the transaction in May, according to media reports yesterday.
The two sides are in final discussions over relevant legal documents, Yuan Xiaolin, Geely’s spokesman for the Volvo deal, told Shanghai Securities News.
The report also quoted Yin Daqing, vice-president and chief financial officer of Geely, as saying the deal is likely to be signed before the Lunar New Year, which falls on Feb 14.
The Economic Observer newspaper said Geely and Ford have decided to sign the deal on Feb 8, and the deal value is likely to be lower than $1.8 billion.
Under the deal, Geely will set up an international investment company in Beijing with registered capital of 8 to 9 billion yuan ($1.2 to 1.3 billion) to obtain Volvo’s assets. It will also establish a branch in Sweden, Volvo’s headquarters, the report said.
Geely would hold 80 percent stake in the investment company, while private funds and banking sources may hold the balance.
The Chinese company has promised to retain Volvo’s brand and operations in Sweden after the transaction, including the headquarters, production facility and research center.
Geely will start producing Volvo cars at a new factory in Beijing, with an annual capacity of 300,000 units, the report said. It also plans to enhance its global annual output to 900,000 units within five years and make the Volvo brand profitable by 2011.
However, Geely refused to comment on the reports yesterday.
“The deal provides Geely both opportunities and challenges,” said Zhang Xin, an auto analyst with Guotai Junan Securities. “Geely will benefit from the acquisition on a long-term basis. Volvo’s assets and technologies will help Geely improve its competitive edge and lead in the world’s biggest automobile market.”
XAIC extends contract with Boeing
A Boeing 737 aircraft parked at Jinan Yaoqiang International Airport. The deal will help XAIC in its efforts to become a strategic partner for Boeing. [China Daily]
Xi’an Aircraft International Corporation (XAIC) yesterday delivered the 1,500th vertical fin for Boeing’s best-selling B737 aircraft and signed an extended contract to supply another 1,500 units to the US aircraft manufacturer.
The new order is the largest subcontracting agreement in terms of volume the Chinese aviation manufacturing industry has ever received.
“The extension of the contract showed that XAIC is capable of producing large-size aircraft components in large volume for leading international aviation manufacturers. It is a milestone in XAIC’s efforts to become a strategic partner for Boeing and Airbus,” said Meng Xiangkai, president of XAIC.
Vertical fins are typically found on the aft end of the fuselage and are intended to reduce aerodynamic sideslip.
XAIC, a subsidiary of Aviation Industry Corporation of China (AVIC), signed the first contract for producing 1,500 units of B737 vertical fins in 1996 and is currently able to produce 21 to 24 units of vertical fins per month.
Boeing manufactures 31 B737 planes per month. Nearly two-thirds of the B737 worldwide fleet are equipped with vertical fins produced by XAIC.
Boeing and XAIC did not reveal the total value of the contract.
“Since the 1980s, Boeing has purchased parts and components worth more than $1.5 billion from China. That (the purchasing volume) will more than double in the coming years,” said George Maffeo, vice-president for supplier management, airplane programs, Boeing Commercial Airplanes.
Sanmen nuclear reactor to start in 2013
A worker stands next to a sign that reads “Radiation Risk” in the Daya Bay Nuclear Power Plant in Guangdong. China is building six third-generation nuclear power reactors. [Agencies]
State Nuclear Power Technology Corp (SNPTC), a major nuclear power developer in China, said yesterday its first third-generation nuclear power reactor is expected to start operations in August 2013, marking the first use of the technology in the country.
Following the completion of the first reactor, located in the Sanmen nuclear power project in Zhejiang province, the company’s other three reactors will start generating power by 2013 and 2014, said Wang Binghua, chairman of SNPTC.
The four reactors, which use the AP1000 technology from the US-based Westinghouse, each has capacity of 1,250 mW. SNPTC signed an agreement with the Westinghouse-led consortium for the use of the technology to build four reactors, a pair in Sanmen in Zhejiang and another two in Haiyang in Shandong.
Among the four reactors, construction of three reactors began last year.
SNPTC, which is responsible for the import and localization of the third-generation nuclear power technology, is also preparing for the construction of China’s first three inland nuclear power projects in Hubei, Hunan and Jiangxi provinces.
The three projects will also use the AP1000 technology. They will meet the requirements for starting construction this year, said Wang.
“Work on our third-generation reactors is going on smoothly. It will certainly upgrade the technology of the domestic nuclear power industry,” said Wang.
Construction of the third-generation reactors has boosted the development of the equipment-manufacturing sector, he said.
Besides the imports of the US technology, State-owned SNPTC has also started the localization work of the advanced technology. The company and China Huaneng Group recently inaugurated a joint venture to build and operate a demonstration project, which uses a technology called CAP1400.
The project is located in Weihai, Shandong province. The CAP1400 technology is based on the AP1000 technology.
Construction of the project is expected to start in April 2013. It is scheduled to start operations by 2017.
After the CAP1400 project, work on another CAP1700 project, which uses similar technology but with larger capacity of 1,700 mW, will also begin, according to SNPTC.
“Development of the third-generation reactors, which are much safer and with longer life spans fits well with China’s efforts to build an environmentally friendly economy. Localization of the technology will greatly improve the competitiveness of China’s nuclear power industry,” said Tang Zide, a researcher with SNPTC.
China is building six third-generation nuclear power reactors in the country. Besides the four using the AP1000 technology, work on two rectors using the EPR technology developed by France-based Areva has started.
SOHO China seeks M&As
Cash-rich commercial property developer SOHO China will continue to seek merger and acquisition (M&A) opportunities in Beijing and Shanghai this year to expand its business, Chairman Pan Shiyi said.
“We will acquire existing commercial properties from institutional investors and offer custom-tailored marketing and leasing services to make them more profitable,” Pan said.
SOHO Nexus Centre, a prime commercial and retail complex that SOHO acquired for 2.34 billion yuan ($342.8 milllion) in November, attracted a transaction of 2.09 billion yuan on its first day of trading this month, with a unit price of 43,100 yuan per sq m.
In 2009, SOHO made four acquisitions with a total consideration of approximately 10.6 billion yuan, adding commercial land banks totaling 740,000 sq m in Beijing and Shanghai city centers.
Surging Skoda: Spectacular 3 years
Superb Haorui, Skoda’s flagship model. [File photo]
Skoda, the Czech subsidiary of German automaker Volkswagen Group, more than doubled its sales to 123,000 units in China last year, a staggering achievement for such a newcomer.
Though a century-old brand, Skoda entered China’s market just three years ago as a part of Shanghai Volkswagen’s dual-brand strategy.
Skoda now makes three models at the Sino-German joint venture – the compact Octavia Mingrui, the subcompact Fabia Jingrui and the mid-sized Superb Haorui.
All three have performed well as segment leaders and contributed to Skoda’s rapid growth.
In the middle of 2007, Skoda introduced its first locally built model, the Octavia Mingrui, and sold 27,112 units in just half a year.
By the end of 2008 that single model ranked in the top three in the A-class high-end market as sales surged 117 percent to nearly 60,000 units.
Skoda then launched the Fabia Jingrui the same year that has turned out to be one of the fastest-growing models in the A0-class segment. The subcompact now has stable monthly sales of more than 3,000 units.
In August last year, Skoda put its flagship model Superb Haorui into the B-class market. It also quickly gained in popularity with monthly sales surpassing 3,000 units in the highly competitive medium- and high-end segment.
With the three models, Skoda has built up a product line that covers China’s mainstream markets, the company said.
Skoda’s 2009 full-year sales jumped 108 percent, twice the growth rate of the country’s overall passenger vehicle market. According to statistics from the China Association of Automobile Manufacturers, passenger vehicles sales increased by 53 percent to 10.33 million units last year.
Peter Miling, Skoda brand chief at Shanghai Volkswagen, said in an earlier interview that China is expected to surpass Germany to be Skoda’s largest market in the world this year.
Sales have already exceeded 200,000 units since it entered the China market.
In order to better meet the demands of domestic customers, Skoda revamped and upgraded the existing models last year.
It has also built a sales network of 235 dealerships and showrooms across China. The company said it will greatly expand the network this year to further boost sales.
Skoda now accounts for one-sixth of total sales for Shanghai Volkswagen, which once again was the nation’s champion last year with total sales of 729,000 units.
FAW Group sets 2010 sales target at 2.3m units
China FAW Group Corp has set its sales target for 2010 at more than 2.3 million units, an increase of 18.3 percent from a year earlier, an executive said Sunday.
Jin Yi, FAW Group’s deputy general manager, told the 2010 purchase convention that the nation’s No 2 carmaker also targets a sales revenue of 290 billion yuan ($42.5 billion), up 11.2 percent from 2009.
The carmaker reported strong sales last year thanks to cuts in purchase tax and subsidies on small car purchases. It sold 1.95 million units last year, with a sales revenue of 260.8 billion yuan. The two figures recorded annual growth of 26.9 percent and 23.4 percent, respectively.
The government stimulus, including subsidies on purchases of small vehicles in rural areas and of new-energy cars in pilot cities, and also old-for-new subsidies, will continue to spur sales this year, Jin said.
The SAIC Group, China’s largest carmaker, has set 2010 sales target at 3 million units, up from 2.72 million units last year, Hu Maoyuan, the company’s chairman, said Saturday.
China overtook the United States as the world’s largest auto market last year. The China Association of Automobile Manufacturers announced on Jan 11 that 2009 auto sales rose 46.15 percent year-on-year to 13.64 million units.
Chery aims big for 2010 sales
China’s largest indigenous automaker Chery Auto plans to outsell its home-grown rival BYD Auto this year, the China Business News (CBN) reported today, citing an unnamed source.
Ma Deji, Chery’s deputy general manager, said its company has set the 2010 sales target at 700,000 units. But a company insider told the CBN that Chery will not loose ground to the Shenzhen-based BYD Auto, which has planned to sell 800,000 units this year.
The Anhui-based automaker just inaugurated a new plant in Wuhu, Anhui province on Jan 16. With a 10-billion-yuan investment, the plant will finally add up Chery’s annual vehicle production capacity to 1 million units after it goes into production in 2012.
Chery had already built a 4.7 billion yuan ($688.3 million) plant in Dalian, Liaoning province last year. The Dalian plant, with an annual production capacity of 200,000 vehicles, is set to go into operation in June 2011.
As of 2009, the automaker was able to produce 600,000 units of vehicles annually. It sold more than 500,000 cars that year, ranking the first among China’s home grown automakers.
Chery’s president Yin Tongyue said at the beginning of 2009, that his company plans to realize the annual sales target of 1 million vehicles as early as 2011.
BYD Auto, 10 percent owned by Warren Buffett’s Berkshire Hathaway Inc, aims to produce 800,000 vehicles this year, up from a previous target of 700,000 units, backed by robust demand.
It reached its 2009 target of 400,000 vehicles in November 2009, and expected the final sales to come in at around 440,000 units, Paul Lin, manager of the company’s marketing department said in December, 2009.
CNNC unit buying uranium mine stake
CNNC International Ltd, the listed unit of China’s largest nuclear power plants operator China National Nuclear Corp (CNNC), said yesterday it would buy a stake in a uranium mine in Niger from its parent for HK$414 million ($53.3 million), and fund the deal by issuing convertible notes.
The company will acquire Ideal Mining Ltd from its parent CNNC. Ideal Mining holds a 37.2 percent stake in the Azelik uranium mine in Niger, it said in a statement to the Hong Kong bourse yesterday.
The Azelik mine comprises three uranium deposits and has an estimated mine life of 17 years. It is estimated that the mine contains resources of around 11,227 tons of uranium, said the statement.
Production is expected to start in the second half of this year with an estimated annual production capacity of around 700 tons when complete, it said.
Philip Li, an executive with CNNC International, told Dow Jones that the company would look at acquisition opportunities for uranium resources in Kazakhstan to support the rapid development of China’s nuclear power industry.
The firm aims to be the largest uranium supplier in China. It would consider more acquisitions in the future, Li said.
Analysts said the company’s efforts to boost uranium resources are in line with China’s move to build more nuclear power plants to meet the rising domestic demand for electricity. “As China has accelerated the development of the nuclear power industry, more feedstock is required to fuel these projects,” said Han Xiaoping, chief information officer of China5e.com, a leading energy website in the country.
According to the National Energy Administration (NEA), the country’s energy regulator, China has 20 nuclear reactors under construction now, with total capacity of 21.92 gW.
CNNC is now developing uranium resources in countries like Niger, Kazakhstan, Mongolia and Namibia.
CNNC made profit of 5.2 billion yuan last year, up 13.5 percent from a year earlier.
