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Google denies \’exit China\’ rumor

Search giant says operations in the country are running as usual
Google on Thursday denied it was planning to shut down its business in China by the end of the month, dispelling rumors that it had informed its Chinese advertising agents to cease their business operations in the country.
Google\’s spokeswoman Marsha Wang told China Daily on Thursday that the company had not ordered its domestic advertising agents to stop doing business.
\”That\’s not possible. Our China operations are still at normal,\” Wang said.
Google\’s China team continued to develop new services, hire people and its businesses were \”as usual\”, Wang said.
In fact, two of Google\’s domestic adv
ertising agencies also confirmed to China Daily on Thursday that their business was \”running well\”.
Rumors about Google\’s possible retreat from China were running high on Thursday ever since its CEO Eric Schmidt said at a media summit in Abu Dhabi a day earlier that he expected \”something will happen soon\” about its high-profile spat with China.
Schmidt had said on Wednesday that Google\’s dispute with China would be solved \”soon\” and that the search giant was still in active negotiations with Chinese officials.
China\’s Ministry of Industry and Information Technology refused to comment on the Google issue on Thursday.
But Qin Gang, the Foreign Ministry spokesman said at a regular press briefing that \”the communication channel between relevant Chinese ministries and foreign Internet operators is running well.\”
Qin also reiterated that foreign Internet operators should respect Chinese law while doing business in the country.
Google sent shockwaves across the business and political world when it declared on Jan 12 that it would stop censoring Chinese search results, and said it was considering pulling out of the country.
The announcement quickly turned into a political spat between Beijing and the US administration, which is weighing the merits of taking the dispute to the World Trade Organization.
Most industry experts believe that Google\’s likely exit from China may be a lose-lose deal for the search leader and China.
Top Chinese officials have, during the past few days, also sounded ambiguous over whether Google was still in talks to resolve the issue or not, signaling the difficulties for the two parties to achieve any sort of meaningful agreement.
Chinese officials attending the Two Sessions over the last few days have repeatedly urged Google to respect related laws of China
But a senior Google official said on Wednesday that the company had not changed its decision to stop censoring its Chinese language search site and that it was prepared to shutter the website if necessary. Tao Wenzhao, an expert on US studies at the Chinese Academy of Social Sciences, said it would be a lose-lose deal if Google retreated from China.
A series of conflicts between the two powers, ranging from the US move to sell arms to Taiwan and US President Barack Obama\’s meeting with the Dalai Lama, have put the ties on ice.
Tensions, however, now appear to be easing after Washington sent two high-level officials earlier this month to mend relations.
Tao said even if Google finally decided to exit from China, the incident would have little impact on the soured relations between Beijing and Washington.
\”It is worth remembering that Google is not the American government. This is just a commercial case,\” Tao said.

Geely secures financing to buy Volvo: report

The parent of China\’s Geely Automobile has secured financing to buy Ford-owned Volvo cars for about 15 billion Swedish crowns ($2.10 billion), a Swedish business daily reported on Wednesday.
Dagens Industri, citing sources, said that Chinese financial institutions and regional government bodies had provided the money for Geely to complete its purchase.
The paper quoted its source as saying that the money was already \”in the bank account\” of parent Zhejiang Geely Holding, (ZGH) which would also have offered guarantees to Ford about the financing of its business plan for Volvo.

Earlier this week, ZGH said it had yet to sign an agreement in its ongoing bid for Volvo cars, though its plan to buy the brand for $2 billion was proceeding on track.
The company, China\’s largest privately owned carmaker, had been aiming to reach a formal deal last month and complete its purchase by May, according to a document seen by Reuters.
Geely plans to nearly double Volvo\’s annual global production with a new factory in Beijing to pull the Swedish automaker out of the red by 2011, according to a plan put together by the company.

China Mobile buys 20% of Pudong Bank

China\’s largest mobile phone service provider became a strategic investor in the Shanghai Pudong Development Bank (SPDB) after a multi-billion dollar stock purchasing deal on Wednesday.
Guangdong Mobile, China Mobile\’s branch in south China\’s Guangdong province, bought 2.2 billion shares of  at the cost of 39.8 billion yuan ($5.83 billion), claiming 20 percent of the bank and becoming its second largest shareholder.
The deal would benefit China Mobile\’s shareholders in the short, medium and long run, said the company\’s President Wang Jianzhou. It serves as part of a plan to develop mobile phone banking and business services.

The deal would also expand the mid-sized lender\’s capital adequacy from 4 to 10 percent, enough to support a three-year rapid development phase for the bank, said Wu Yonggang, an analyst with Guotai Junan Securities.
The two companies will launch extensive cooperation with each other, combining their capital and technological advantages, according to a strategic cooperation memorandum.
Shanghai International Group is the largest shareholder of SPDB. China Mobile will not seek to hold more than 20 percent unless consented by SPDB, according to the purchase agreement.
China Mobile would not involve itself in the operation of SPDB, Wang added.

Google prepared to leave China

A second Google executive said on Wednesday that the company had not changed its decision to stop censoring its Chinese language search site and it was prepared to shut down the website if necessary.
\”We are no longer willing to censor our search results in China, and we are currently reviewing our options,\” Google vice president and deputy general counsel Nicole Wong said in her testimony before the US House of Representatives Foreign Affairs Committee.
\”If the option is that we\’ll shutter our .cn operation and leave the country, we are prepared to do that.\”
Wong added that the company would do it in an \”appropriate and responsible way,\” that it has \”hundreds of employees on the ground\” and understands \”the seriousness or the sensitivity\” of its decision but \”we will stop censoring\” search results in China.
At the congressional hearing on \”The Google Predicament: Transforming US Cyberspace Policy to Advance Democracy, Security and Trade,\” the Google executive said they had found out those attacks came from China but they were not going to say \”who is carrying out these attacks\” and they would hope the Chinese government would work with the US officials to investigate the issue.
She also told the lawmakers that the decision to review the business operation in Chinawas made by the executives in the US, \”without the knowledge or involvement of our employees in China.\”
After the hearing, Chairman of the Committee on Foreign Affairs Howard L. Berman told reporters that the USgovernment should \”think more carefully\” before jumping into bilateral sanctions over the Google issue.
\”First we try diplomatic engagement,\” he said. \”Our ambassador in Beijingand other diplomatic persons are engaging with Chinese government over these issues. And we should look at the current trade agreements in WTO to see in what extent practice is going on in terms of violating the agreements. All of these are steps issues.\”
Google Chief Executive Eric Schmidt said Wednesday at a media conference in Abu Dhabithat the discussion with Chinawill yield results soon, according to Bloomberg.
\”We decided not to publicize our dealings with China,\” he said. \”We¡¯re in active talks with the Chinese government, and we have no specific timetable, but something will happen soon.\”

JAC to break ground in Vietnam

 
A Jianghuai truck is displayed at a recent auto show in Zhengzhou, Henan province. [SHA LANG/FOR CHINA DAILY]
 
Anhui Jianghuai Automobile Co Ltd (JAC), an auto producer based in Hefei, will start construction on its first overseas plant to produce trucks in Vietnam in April, the company chairman said on Tuesday.
The plant, a joint venture with Vietnamese partners, will mainly produce medium- and light-duty trucks, Zuo Yan\’an, chairman of the company, told China Daily on the sidelines of the annual, ongoing National People\’s Congress session.
Construction of the plant is part of the company\’s overseas development, said Zuo. The company plans to export 15 percent of its products to overseas markets by the end of China\’s 12th Five-Year Plan (2011-2015).
By that time the company\’s total output is expected to rise to 1 million vehicles, he said.
JAC Motors also said last year that it was considering establishing a manufacturing base in Brazil.
JAC produced 322,000 automobiles last year, but with only 6 to 7 percent being exported to its main overseas markets in the Middle East, South America and Southeast Asia. The company plans to produce 400,000 autos this year, said Zuo.
JAC has also worked to develop clean energy vehicles. The company\’s clean energy bus has already been put into commercial use, and the firm is now doing research and development on green cars.
Analysts said domestic automakers have been smart to begin shifting their focus recently from product exports to capital outflow, as overseas production might reduce costs, avoid trade barriers and from a long-term perspective, establish Chinese brands in the international market.

Hu Song, an auto analyst with Haitong Securities, warned Chinese automakers that overseas production also brings many challenges from local policies and laws as well management risks.
China\’s biggest homegrown vehicle exporter Chery boosted its global production network to 15 destinations by adding six assembly plants outside the mainland last year.
Brilliance Auto, Chinese partner of German luxury carmaker BMW, has opened an assembly plant for producing its Jinbei-branded light-duty trucks since 2004 in Vietnam.
Chongqing-based Chang\’an Auto, which has already set up five overseas plants, also said that it would invest more than $80 million in South Africa to establish a production plant and a financing company in the next five years.

Xiangguang Copper may buy 15% stake in CuDeco

Xiangguang Copper, a copper smelting unit of chicken supplier Shandong Fengxiang Group is planning to acquire a stake in Australian gold and copper miner CuDeco, to bolster its raw material supplies.
Fengxiang, which is better known as a supplier to global fast food chains such as KFC and McDonald\’s, confirmed its unit was in talks with CuDeco for a 15 percent stake in the latter\’s Rocklands copper mine.
\”We are interested in purchasing overseas resources to secure our material supplies and CuDeco could be a good option,\” said Liu Zhiguang, president of Fengxiang\’s subsidiary Xiangguang Copper, which has an annual copper production capacity of 400,000 tons.
\”The Xiangguang deal will help improve our finances, while the Chinese firm will get access to copper supplies,\” said the Australia-listed firm\’s chairman Wayne McCrae.
Copper, used in telephone wires and computer chips, more than doubled in value last year and is in high demand for use in the power stations being built to alleviate China\’s energy shortage.
The Rocklands mine, near Cloncurry, Queensland, will have a 10 year exploration time frame and an annual production capacity of 3 million tons. It is expected to generate about $960 million in revenue annually, said McCrae.
CuDeco also said the company was also in talks with Chinese iron ore trader Sinosteel for the project financing estimated at around $100 million.
\”If we bag the project, it would be the first mining construction project undertaken by a Chinese firm in Australia,\” said Lu Pengcheng, general manager of Sinosteel Equipment & Engineering Co.
CuDeco said drilling of the 24 square kilometer Rocklands project could go on for up to a decade, but it was committed to begin mining operations by mid-2011.
McCrae, who has more than 30 years of experience in mining exploration, discovered Century, the world\’s second biggest zinc mine, in the early 1990s. Nineteen years ago, he sold it to Rio Tinto for $3 million. Later Rio Tinto sold the mine to OZ Minerals Ltd.
\”I\’m not going to do that (mine selling) again. I want to develop the mine, and this will be the last project for me,\” said McCrae, who is anxious to find a partner to ward off any takeover threat.

China Railway pays $60m for acquisition

China Railway Group Ltd has wholly acquired China Railway Port Channel Engineering Co, Ltd for 409 million yuan ($60 million) from the latter\’s parent company, the China Railway Engineering Corporation.

China Railway said the acquisition strengthens its control in the industry, especially its hydraulic works constructing capability.
China Railway realized 107,600 yuan in net profit after tax in 2009, compared with 4.02 million yuan in 2008.
The company closed today at 5.76 yuan on the Shanghai Stock Exchange, and HK$5.79 (75 cents) at Hong Kong Exchanges.

Gezhouba profits abroad

The Gezhouba dam in Yichang, central China\’s Hubei province. LIU JUNFENG/FOR CHINA DAILY
China Gezhouba Group Co Ltd (CGGC), one of the largest engineering and construction companies involved in the Three Gorges Dam project, said overseas contracts are likely to take up half of its business in the future, according to its president Yang Jixue.
\”Overseas markets will account for 50 percent of our business in the next three years, from the current 36 percent, boosted by massive projects in Africa, the Middle East and Central Asia regions,\” Yang said.
The group now has 44 overseas projects – mostly hydroelectric-power related – in 17 countries or regions, according to Yang.
The State-owned infrastructure company, based in Central China\’s Hubei province, last month signed a 4.97 billion yuan ($727.78 million) contract with a Kazakhstan company to set up a hydroelectric-power plant in that country. The contract with Kazakhstan Natural Gas Technology Co Ltd would allow it to construct a 254-megawatt hydroelectric-power station on the banks of the Chilik River in Alma-Ata, Kazakhstan.
The volume of Gezhouba\’s overseas business ventures is much higher than its larger rivals – the average of which is 20 percent – mainly because as a leading builder of hydroelectric projects, Gezhouba has a limited market at home compared with its larger rivals which are more experienced in other infrastructure construction, industry analysts said.
\”As the main contractor for China\’s Three Gorges Dam, Gezhouba is very experienced and advanced in hydroelectric projects, which afforded the builder many opportunities in the market, said Li Zhirui, an industry analyst with First Capital Securities. \”China\’s construction contractors, as a whole, have big advantages because of their low labor costs in the global construction market.\”
However, they have a smaller market share in more mature markets including the US and Europe, Li said.
Yang estimated that the group would secure 50 billion yuan in new orders in 2010, with 20 billion yuan from foreign markets and 30 billion yuan from the domestic market.

\”We expect 30 percent revenue growth this year based on current orders in hand and the growing momentum,\” said Yang.
The builder said new orders secured in January this year increased by 40 percent compared with the same period in 2009.
Gezhouba signed 42 billion yuan in new orders in 2009.
\”The impact of China\’s 4 trillion yuan stimulus package on the infrastructure sector will fade out in the years to come, resulting in less investment in public construction work and forcing domestic contractors to tap developing markets,\” Li from First Capital said.
In the meantime, the company, primarily engaged in the construction of power plants, dams, roads, bridges and civil engineering projects, is also diversifying its business by increasing its cement output to 20 million tons in 2010, which, according to Yang, would generate 4 billion yuan in revenue this year.

State Grid, Quadra join hands

Workers inspecting copper plates at a mine in Antofagasta, Chile. China is expected to use 6 million tons of copper this year, up 7 percent from 2009. [Bloomberg News]
New 50-50 joint venture plans to develop copper mines in Chile
State-owned public utility, The State Grid Corporation of China (SGCC), plans to cooperate with Canadian miner Quadra Mining Ltd to jointly develop copper mines in Chile, to secure raw material supplies for electric cables and to expand its investment portfolio.
According to a statement issued by Quadra on Monday, State Grid International Development Ltd (SGID), a wholly owned subsidiary of SGCC, will form a 50-50 joint venture with Quadra to develop and operate Quadra\’s Sierra Gorda project, Franke Mine and other copper assets in Chile.
The Sierra Gorda project and Franke Mine are valued at $900 million in assets, said the Quadra statement.
As part of the agreement, SGID will also subscribe for 10.9 million Quadra shares, or a 9.9 percent stake in the company, at C$13.91 ($13.53) per share through the Canadian miner\’s private placement.
\”It is SGCC\’s strategy to accelerate overseas business development and diversify its investment portfolio,\” said an SGCC executive who declined to be named.
The project funding will be made in accordance with the Sierra Gorda construction schedule and may spread over two years, said Paul Blythe, president and CEO of Quadra. \”The feasibility study is now under way and due for completion in December 2010,\” he said.
\”The strategic joint venture brings together a unique and powerful combination, with SGCC\’s financial capacity and position as a major end user of copper in China and Quadra\’s skills in acquiring, developing and operating copper producing assets,\” said Blythe.

About 60 percent of copper is used in the power industry. However, Wei Jianghong chairman of the nation\’s second largest copper producer, Tongling Nonferrous Metal Group Co Ltd, said on the sideline of the ongoing National People\’s Congress (NPC): \”Our sales to wire and cable users indicate that the demand is rather weak.\”
Wei said China, the world\’s largest copper consumer, is expected to use 6 million tons of copper in 2010, up 7 percent from 2009, but lower than earlier expectations of a 14 percent year-on-year growth.
Although the short-term demand from the electricity industry is weak, the long-term demand is still strong as China plans to upgrade its grid for transmission of new energies like solar and wind power and to improve efficiency.
Last week, Premier Wen Jiabao said in his work report to the NPC that China will actively develop new and renewable energies, and go ahead with the construction of smart grid.
In line with the national strategy, China\’s two grid operators, SGCC and China Southern Power Grid, have put smart grid construction on top of their agenda.
SGCC, the larger of China\’s two grid operators, said it would complete the construction of smart grid by 2020, entrenching its position as a major end user of copper, the raw material for electric cable.
As the commodity price rallies, both miners and end users like SGCC are seeking to pile up resource reserves, said Peng Bo, an analyst at Guosen Securities. Copper climbed new highs after an earthquake hit Chile, the world\’s largest copper producer. The prices adjusted down later on concern that China\’s demand may decline if the government retreats from its stimulus package. 

SAIC Feb auto sales up 45%

SAIC Motors, China\’s largest carmaker, said its vehicle sales rose 45 percent in February as Beijing\’s policy incentives continued to drive buyers into showrooms in the world\’s largest auto market.
Chinese automakers\’ vehicle sales in the first two months of the year are skewed by the timing of the Lunar New Year, which came in January last year but in February this year, making the single-month figures volatile. SAIC\’s February growth was only half that of January.
\”Slower growth in February was because of the week-long Chinese Lunar New year holiday,\” said Zhang Xin, an analyst with Guotai Junan Securities in Beijing.
\”Most people usually buy cars well before the holiday, which explains the explosive growth in January. The decline of the overall Chinese auto market in January 2009 also inflated January\’s growth figure.\”
China has been a major bright spot amid a global industry downturn as government\’s policy incentives, including cuts on sales tax for small cars, bolster automobile demand.
SAIC, a China partner of General Motors and Volkswagen, said it sold 248,000 vehicles in February, compared with 307,384 in January, when sales were up 90 percent from a year earlier.

SAIC\’s venture with Volkswagen sold 60,000 vehicles in February, and its venture with GM 59,000 vehicles, it said in a brief statement carried in state newspapers.
The country\’s No 2 automaker, Dongfeng Motor Group Co, reported a similar pattern of strong but slowing sales growth.
Donfeng, a partner of Honda Motor Co and Nissan Motor, sold 119,082 vehicles in Feburary, up 50 percent year-on-year, but down from 129 percent growth in January, company data showed.
For January and February combined, SAIC\’s sales were up 67 percent, outpacing Honda, where two month sales rose 47.3 percent.
The company\’s president, Chen Hong, told Reuters on Sunday that he expected sales growth this year to come in at over 10 percent, sharply lower than the 57 percent growth in 2009, as the overall market moderates from booming growth last year that was supported largely by government incentives.
The company expects to sell at least 3 million vehicles this year, Chen said, adding that the company expects to roll out at least four of its own-brand models during the year, including an SUV and two MG models.
Official figures for nationwide February car sales are due to be released on Tuesday. Growth is expected to moderate from January\’s 116 percent annual rise, which came as a result of the pre-holiday rush to buy cars.