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General Motors Eyes China's Prosperous Auto Market
(February 28, 2003) General Motors' move into the Chinese market has
increasingly pushed its business expansion, and at a very much faster speed than
its rivals, says Phil Murtaugh, top official overseeing GM China operations.
"We have reaped great success not only in market performance but in cooperation
with our strategic partners, not only in expanding our portfolio but in forming
the distribution network," the 48-year-old chairman and CEO of General Motors
China noted.
As the world's largest automaker and one of the largest foreign investors in
China, GM has set up four vehicle-manufacturing joint ventures in the country,
along with one design joint venture and two solely-funded enterprises. It
employs nearly 9000 people.
Before China joined the World Trade Organization, many expected the country's
car industry would be among sectors most affected by the move. In 2002, the
first year after China's entry into the WTO, however, GM registered a record
high increase in sales of over 300percent, as Chinese quickly snapped up 260,000
vehicles of all types, including imported ones.
"Somebody predicted that the Chinese industry would suffer a lot, but it proved
false while China's car sales reached an historic high. Meanwhile GM also grew
rapidly beyond people's expectations," Murtaugh said.
In the past year, China's auto output and sales reported unprecedented figures
of 3.25 million and 3.24 million units respectively, dwarfing growth rates in
the decade before 2002. And the country's car output topped just over one
million for the first time that year, a sharp 55 percent rise from the previous
year before China became a WTO member.
The robust expansion of the Chinese auto market has offered tremendous
opportunities for foreign automakers. Industry analysts consider China will be
the most powerful engine pulling auto markets worldwide in the next decade.
Murtaugh joined the initiatives six years ago to build the largest Sino-US joint
venture -- the Shanghai General Motors (SGM) with its major Chinese partner, the
Shanghai Automotive Industry (Group) Corp. (SAIC). These days modern car
workshops with world-class facilities stand in the eastern suburbs of Shanghai.
"SGM is the model for cooperation between GM and SAIC, and it reached our design
capacity within only four years. That means we did it much faster than any other
company has ever done," the gray-haired chief executive said.
SGM has become one of the three largest car manufacturers in the country.
"I think far more important than 2002 is the year we actively became part of the
development of the whole industry (in China)," Murtaugh said, referring to
examples of GM investing 30 million US dollars to take over a 34 percent stake
of the minivan maker SAIC-Wuling Automotive Co., later renamed as the
SAIC-GM-Wuling Automotive Stock Ltd., and when GM lobbied SAIC into purchasing a
stake in GM Daewoo, the first time a Chinese automaker had invested outside
China.
He also noted that for the first time SGM had exported vehicle engines on a
large scale to developed countries.
The chairman, who has worked for six years in China and became an "Honorary
Citizen" of Shanghai, has witnessed first hand the fast-track development of the
Chinese car industry.
Standing in his office beside the landmark Century Avenue in Pudong, Shanghai's
economic powerhouse where world conglomerates are based, he looked at car flows
outside the window and said: "There's an old Chinese proverb that rising tides
raise all the boats, so I think the entire industry has had a good performance
(in the past year). If the market rises 10 percent as we expect, then China will
hopefully become, ahead of Germany, the world's third largest auto market this
year."
"This is going to be very, very challenging for everyone," he added.
"Fierce competition is ahead, but the good news is the industry gives us great
opportunities," Murtaugh said. Many of GM's Chinese suppliers have reached a
certain production scale, and "if the whole market will remain as good, our
China operations' cost will be more competitive".
"Our investment has indeed yielded significant achievements in the last year,
and laid a solid foundation for further development," he said with apparent
satisfaction. Even better, he stressed, the Chinese government actively abided
by its WTO membership commitments in the first year after joining the
organization. This had helped create a more transparent, standard market
complying with international practices, which was good for promoting foreign
investors' development in China, including General Motors.
Confident of China's auto industry, the executive also declared GM was also sure
of the sustained prosperity of the Chinese economy, growing at an annual average
rate of over 7 percent despite a shaky global economy. "I sincerely believe GM
will win even more room for development in China," Murtaugh concluded.Sources: People's Daily
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Intel Enters China's Internet Cafe Business
(February 25, 2003) Intel China announced Tuesday in Shanghai a cooperative
agreement with Shanghai's major Internet cafe service provider, East Networks,
to promote Internet accession and value-added service.
Under a letter of intent, Intel China will help Internet cafe businesses with
its technology and products and build infrastructure facilities for the
next-generation, broad-band Internet services, including cable and wireless
services.
Intel will train technicians and provide consulting services for East Networks
and help develop the support system for server and desktop computer
applications.
"Our cooperation will play a leading role in creating a network services
platform with bright Internet cultural characteristics," said Li Zhiping,
chairman of the East Networks Chain-store Management Corporation Ltd.
East Networks is a state-controlled company with more than 260 Internet cafes in
Shanghai, boasting more than one third of the city's Internet cafe computer
terminals.
Sources: People's Daily
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American Express Eyes China's Business Travel Market
(March 1, 2003) American Express intends expanding its business travel services
network into 40 more Chinese cities in the next 12 months, a senior company
official said in Shanghai.
By then, the company would be able to offer all-round services ranging from
network aid, planning and consultancy, to analysis and booking services, said
Charles Petruccelli, president of the Global Services of American Express.
A survey by American Express, which already has a joint venture in Beijing,
shows China spends up to 10 billion US dollars on travel and related services
each year, with 4 to 5 billion US dollars on business travel.
If China keeps up its current growth, within five years it could feasibly boast
a vast business travel market close behind those of the United States or Japan,
according to American Express.
The past seven months have seen a rocketing sales income growth rate of 200
percent for the CITS-American Express Travel Services Ltd, a joint venture
co-sponsored by American Express and the China International Travel Service (CITS),
a travel leader in China.
Sources: People's Daily
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Sun sets sights on China
(March 19, 2003) China will become one of the most important markets for US
information technology (IT) giant Sun Microsystems Inc in the coming few years,
announced company Chief Executive Officer Scott McNealy on Monday.
"We are well on our way to be a US$1 billion player here," said McNealy in
Beijing, "I do not want to predict when, but it will be very soon."
McNealy said Sun Microsystems' revenues in China rose by three fold last year
and the company would continue to enjoy high growth in the future.
Besides promoting Sun's new architecture N1 during his fourth trip to China,
McNealy also cast his eyes on the office software market in China.
Sun signed an agreement on Monday with China's second IT distributor PCI-SLR
Technology (China) Co Ltd to bundle Sun's office software StarSuite 6.0 with
Linux operating system-based computers PCI-SLR sells.
In January, Sun won a contract in the government procurement of Beijing
Municipality with StarSuite.
Previously, the third largest domestic computer maker Tsinghua Tongfang also
began to bundle StarSuite in all personal computers.
According to Guo Yuanzheng, a business development manager of Sun Microsystems
(China), his company aims to take 30 per cent of the domestic office software
market within two years.
McNealy said on Monday that his company would donate US$2 billion worth of free
training and licences to Chinese universities and students as part of a Sun
Academic Initiative.
"Today, we are further expanding this initiative to China, which will benefit
some 16 million Chinese university students," McNealy said.
Sun will give free licences of its Java language, Solaris operating system, Sun
One infrastructure software, StarSuite and offer 20 related courses.
The US company also announced on the same day that it would set up a
Zhongguancun-Cadence software design college in Beijing with the world's largest
electronic design firm Cadence.
Sun will provide some 200 processors and 300 servers and workstations as well as
necessary software to the college to train electronic and integrated circuit
design engineers in China.
The company will also set up a EDA (electronic design automation) scholarship
for Chinese students.
Sources: China Daily
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Carrefour Aims to Get Bigger Niche of Chinese Market
(February 28,2003) France-based Carrefour, one of the three leading retailers
in the world, has vowed to get a bigger niche on China's retail market in the
future.
Jean-Christophe Voynet, Carrefour Global Sourcing China Manager, said occupying
the Chinese market means that the "future is in our hands."
Carrefour has been striving to take root in China and open stores all around the
country, Voynet said.
Carrefour had opened 35 stores in 20 Chinese cities by the end of last year
since it first entered China in 1995. The number is expected to reach 49 this
year.
By contrast, Wal-Mart has 23 stores in China and Metro of Germany, the third
largest retailer in the world, has 16 stores in China.
Carrefour's total sales in China was approximately 1.2 billion US dollars last
year, two times that of Metro and much higher than that of Wal-Mart.
As the second largest retailer in the world following Wal-Mart of the United
States, Carrefour has opened more than 9,200 chain stores in 31 countries
worldwide. It registered 78 billion euros in global sales in 2002.
Leading Carrefour officials are happy with their booming business in China.
Voynet used the words "stability" and "potential" to describe their
understanding of the Chinese market.
He listed the reasons of political stability, sustained and steady economic
growth, proactive financial and monetary policies the Chinese government has
adopted to stimulate domestic demand.
Voynet said leading Carrefour officials held that the huge potential was likely
to make China's market a "pole" in the growth of the world's retail business,
and Carrefour was confident of creating a "miracle" in retail business like the
economic "miracle" created by China.
Voynet said Carrefour's strategy for taking root in China is to localize its
businesses, shown by moving its global purchasing center to China from Southeast
Asia and India.
Statistics show that commodities purchased in China, totaling 3.5 billion US
dollars, accounted for 61 percent of Carrefour's total procurement in 2001, and
the figures rose by a big margin in 2002, according to Voynet.
Currently, Carrefour has set up purchasing centers in 11 Chinese cities with an
advanced manufacturing industry, including Beijing, Shanghai, Wuhan, Guangzhou,
Dalian and Ningbo.
Now, Carrefour has granted decision-making power to its regional purchasing
centers in Beijing, Shanghai, Guangzhou and Wuhan, based on which, it has
established a logistics system spreading all over China.
At present, Carrefour has a very stable consumer group in China among people of
low to medium income levels. According to Voynet, among those who visit
Carrefour stores, 28 percent come by foot, 15 percent by bicycle and more than
20 percent by bus.
Source: People's Daily
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