U.S. Commercial Service - American Embassy, Beijing
Vol. 2 No. 153
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Editor: Chuck Winburn
Contributors: CS Shenyang, Wang Ling, Wan Xiaolei,Zhao Peining,Cao Yue,Xi Xianmin
News Briefs
In addition to the article summaries CS Beijing provides , our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit summaries of commercial articles from their local press to the CCB on a rotating schedule. This week we are pleased to feature a contribution from our Shenyang post.
1. Dalian Become Foreign Software Research and Development Center in the Northeast China
2. A Review of China’s 2003 Petroleum and Chemical Industry and Prospects for 2004
3. Imminent Power Grid Construction In China
4. Six Sectors Face Technical Barrier In Export
5. China to spend 15 Billion RMB on Hazardous Waste Disposal
6. E-sports Games Officially Launched in China
1. Dalian Become Foreign Software Research and Development Center in the Northeast China
Recent news reports indicate that Dalian’s efforts to become the foreign software research and development center in the Northeast appears to have achieved measured success. American exporters of application specific software should take note of these developments when contemplating effective approaches to market entry in China: a) consider whether it is necessary to localize the software, and b) plan ahead for the possibility of software research and development in China.
Foreign software companies are anxiously waiting for the release by the Ministry of Information Industry of new regulations on Chinese government software procurement. While Vice Minister Gou Zhongwen has attempted to assuage foreign concerns about fair and competitive procurement practices, he may have tipped his hand when he recently stated that "software firms invested by foreign companies will enjoy equal opportunities from government procurement." Although no one knows whether foreign direct exporters will be excluded from these business opportunities, it is likely that the government procurement implementing regulations will define "domestic" companies by a certain level of investment in China. It is also important to note that the draft regulations suggest that Chinese government entities will be required to procure domestic software where commercially available. It is still unclear as to when the implementing regulations will be issued. Nevertheless, U.S. companies with products that compete against commercially available Chinese products may need to re-evaluate their China strategies if selling to the government
According to a Dalian municipal government official, the Dalian Software Park offers a hospitable environment to localize software (system integration / programming, language adaptation), thereby making the product more marketable to Chinese buyers. Other foreign companies that entered the China market over ten years ago are beyond the software localization stage and have established software research and development centers. These companies include Microsoft, Matsushita Electronic Industrial Co., and Hewlett Packard. For more information about the Dalian Software Park and IT opportunities in the Northeast Region, contact Ms. Liu Yang at yang.liu@mail.doc.gov.
(Sources: Interview with Dalian Bureau of Commerce,2/20/04 - Edited by CS Shenyang)
2. A Review of China’s 2003 Petroleum and Chemical Industry and Prospects for 2004
In 2003, the profitability of China’s petroleum and chemical industry improved significantly, though several factors threatened the development of the sector, including insufficient supply, coal and electricity price rises, and transportation problems. The main economic indicators reached record highs thanks to oil price increases, strong domestic demand and strict anti-dumping policies. Total industrial output value of the petroleum and chemical industry was RMB1,202.870 million (USD 145.538 million) , which is an increase of 18.7 percent year-on-year. Revenue rose 26.4 percent to RMB1, 800 billion( USD 218 billion). Total profits in the industry reached RMB 176.4 billion(USD 21.34 billion), an increase of 43.6 percent over figures for the previous year. The top five growth regions for industry are Helongjiang, Shandong, Xinjiang, Guangdong and Jiangsu Provinces respectively and regions with much higher increase of revenue over figures for the previous year are Hubei, Jilin Provinces and Beijing, the increase of which are 172.6%, 172.5%, and 130.2% respectively. In view of sub-industries, the top three with the increase of revenue in petroleum and chemical industry are oil and gas exploration with 70.5% of the total industry revenue, chemical with 23.9% and crude oil processing with 5.2%.
China’s imports and exports of petroleum and chemical products topped US$100 billion for the first time, totaling US$ 113.35 billion, a 33 percent year-on-year jump. As for import trade, the increase of crude oil import, which takes up 24.3% import volume, will continue. In 2003, the crude oil imports reached 91,126,000 tons and import trade volumeUS$19,820 million, an increase of 31.3% and 55.4% over the previous year. Among import trade volumes, organic materials reached US$16.08 million, which was 19.7% of the total volumes and an increase of 46.1% over the figures for the previous year; synthetic resin reached US$15.92 million, an increase of 14.5%.
The industry is expected to continue to develop rapidly in 2004, with a total estimated rise in industrial output value from 15 to 20 percent. It is estimated that Chinese GDP in 2004 will keep with the pace 7%-8.5% increase in major industries such as auto manufacturing, telecom, IT, construction industries, etc. Moreover, absorbing foreign investment into the industry will be a benefit for the domestic production. Generally speaking, prospects good factors for the development of the petroleum and chemical industry. According to CPCIA (China Petroleum and Chemical Industry Association), in 2004, the production in this industry will be as follows: crude oil 172 million tons, natural gas 35 billion cubic meters, ethylene 7 million tons, synthetic resin 17.5 million tons, synthetic rubber 1.35 million tons, synthetic fiber 12.5 million tons, fertilizer 40 million tons (nitrogen fertilizer 29 million tons, phosphate fertilizer 9.5 million tons), soda over 12 million tons (an increase of 1 million tons over 2003), caustic soda over 10 million tons, and tires over 200 million.
(Source: China Chemical News Vol 8. 2004 - Translated by Wang Ling)
3. Imminent Power Grid Construction In China
Mr. Zhao Xizheng, General Manager of State Grid Corporation, pointed out: the target this year is to develop a grid plan incorporating national, regional and provincial grids to meet the power demand of 1,222 billion KWH (Kilowatt Hours).
According to latest statistics, State Grid Corporation’s power sales in 2003 reached 1,120 billion KWH, among which 38.8 billion KWH was from cross-region supply. The sales revenue was 427.7 billion RMB, equivalent to 51.97 billion USD and profit reached 4.16 billion RMB, equivalent to 505 million USD. By the end of 2003, its total assets reached 857.6 billion RMB, equivalent to 104 billion USD.
State Grid will invest in the Northeast -North China grid connection project; the second phase of North China- Shandong Grid project; and the Wan County- Longquan-Jinmen Power Transmission project. Many projects over 330 KV will be completed and put into use as well, i.e. Bazhou in North China; Northeast, including Dongxu; Jiangsu in East China; Hubei and Henan in central China; Guanzhong in West China-North of Shaanxi. Some projects are still in the implementation stage, i.e. The Three Gorges-North China direct current transmission project, The North West-North China direct current transmission line connection project, The Middle China-North China transmission line connection project, and The Chuanyu-Northwest transmission line connection project. Meanwhile, Beijing, Shanghai and three other cities will start power distribution network construction and other reconstruction pilot projects.
It is anticipated that the State Grid Corporation will transmit over 30 million megawatts of electricity by 2010, with power capacity over 120 billion KWH.
(Source : China Business Times 02/16/2004 - Translated by Wan Xiaolei)
4. Six Sectors Face Technical Barrier In Export
China has frequently come across technical barriers in exports. More and more countries have imposed technical barriers, on China’s exports in a bid to protect their domestic industries. According to the latest survey provided by the Ministry of Commerce, six sectors, namely agricultural products, light industry, electro-mechanic products, textiles and garments, hardware and chemicals, and medical and health care products, have encountered technical barrier restrictions from other countries.
Agricultural products have suffered the biggest losses (US$9.5 billion), followed by light industrial products, (US$4.1 billion); electro-mechanic products, (US$1.7 billion); textiles and garments, (US$1.0 billion); hardware and chemicals, (US$700 million), and medical and health care products, (US$300 million).
(Source: Would Manufacturing Engineering & Market,01/2004 – Translated by Zhao Peining)
5. China to spend 15 Billion RMB on Hazardous Waste Disposal
According to the information released from the State Environmental Protection Administration, P.R.C. (SEPA) on January 19, 2004, the State Council formally approved the Plan to Construct Facilities to Dispose Hazardous Waste and Medical Waste Nationwide.
In order to control the environmental pollution from hazardous waste, medical waste and radioative waste, China is going to spend 14.92 billion RMB (USD 1.8 billion) in the coming three years to safely store and dispose of hazardous waste in China by and large.
Based on this Plan, China is going to take measures to completely improve the current status of hazardous waste treatment, such as:
To construct 31 hazardous waste treatment centers with the total disposal capability of 2.82 million tons per year. The newly reconstructed and expanded facilities will provide a capability of 3.5 million tons per year to treat the hazardous waste generated in the current year and process accumulated storage.
To build 300 facilities to dispose of medical waste to meet the requirement of health improvement in China’s urban areas.
To reconstruct, expand and build 31 new warehouses for radioactive waste at the provincial level, with an increase in storage room of 15,300 cubic meters.
To set up 31 hazardous waste registration centers at the provincial level.
The Plan also elaborates on technical requirements on transport vehicles, construction standards, incinerators, tail exhaust treatments, safe landfill, and system setup.
(Source: China Business Times, 02/05/2004 - Translated by Cao Yue)
6. E-sports Games Officially Launched in China
The All China Sports Federation (ACSF) and The China Olympic Committee (COC) announced on November 28, 2003 that e-sport games were officially identified as the 99th sports game in the country under the auspices of the General Administration of Sports of China. According to the official definition, an e-sport game is a sports game of human intelligence competition undertaken with high-tech software and hardware as competition devices. This represents the birth of a new sports game and perhaps a new industry.
The official endorsement of e-sports games is expected to put an emphasis on the development of a host of high-tech industries, including software, gaming, telecommunications, broadband, Internet as well as computer hardware. Other industries such as entertainment and media are also expected to benefit from these new sports games.
The 2004 China E-sports Game (CEG), sponsored by the General Administration of China and All China Sports Federation will be launched this month. CEG's official web site is: http://www.ceg.net.cn.
Prior to official endorsement, several important international e-sport events had already been introduced into China, but their influence has thus far been limited. Such events included World Cyber Game (WCG) from South Korea, Electronic Sports World Cup (ESWC) from France and Cyberathlete Professional League (CPL) from the US.
(Source: China Internet Weekly Feb 23, 2004, No. 4 Page 22-30, CEG web site - Translated by Xi Xianmin)
Consulate News: Shenyang
In keeping with our goal of making the CCB a more integrated publication, our four China branch offices - Chengdu, Guangzhou, Shanghai and Shenyang - submit consulate news to the CCB on a rotating schedule. This week, we are pleased to feature a contribution from CS Shenyang.
The Association for Manufacturing Technology’s (AMT) Board of Directors will be visiting Dalian during April 21-22, 2004. AMT is a non-profit organization whose 300 members are active in the machine tool industry. The Board’s mission is to review changes in China regulation of international trade, promote trade opportunities, and visit Dalian Machine Tool Group. Earlier in the month, the AMT Board will visit Beijing and n Shanghai. USFCS offices in all three cities will be supporting the AMT trade mission.
For more information on CS Shenyang and the Shenyang consular region, visit our website at http://www.buyusa.gov/china/en/Shenyang.html
DISCLAIMER: CS China does not guarantee the veracity of the original sources of our news summaries. While we do our best to report accurate and timely articles and news sources, you should always check the source for further information.
The China Commercial Brief is a free newsletter published by the U.S. Embassy- Beijing.
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