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| February 2005 |
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| COMPANY IN ACTION |
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Nokia: China Poised to Be Biggest Market
Mobile phone giant Nokia Corp. expects China will likely overtake the United
States as its biggest market within three years, Chief Executive Jorma Ollila
says.
Ollila, who visited Beijing this week to mark the 20th anniversary of the
company's presence there, made the comment Wednesday in the Chinese capital.
The Chinese market is already Nokia's second biggest market after the United
States, and with the expected rollout of third-generation, or 3G networks, and
the surge in new users, he said Nokia was intent on keeping its market share
there strong.
"During the next three years, I would not be surprised to see China become
Nokia's largest market in net sales terms," he said, adding that mobile phone
use there was expected to account for nearly one quarter of the estimated 3
billion subscribers worldwide it has forecast by 2010.
Since it first started operating in China in 1985, Nokia has grown from five
employees there to more than 4,700. Worldwide, the Espoo-based company employs
about 53,000 workers.
China's sales in China rose 44 percent to $3.6 billion and the company plans to
expand its manufacturing facilities there, along with research and development.
Currently, Nokia operates five R&D units and has four manufacturing centers
there.
"This represents a tremendous opportunity for Nokia," Ollila said. "Our aim is
to maintain our leading position in China and to continue to grow as the most
preferred partner within the Chinese mobile communications industry."
Sources: Nokia
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UPS Says It Has Big Plans for China
The world's largest package-delivery service, United Parcel Service Inc., is
looking to China's burgeoning logistics market to drive growth for its earnings
as the company's home market in the United States stagnates, a company official
says.
"Our plan in China is really aggressive," said Daniel Chen, managing director
for strategic planning and development for UPS in China.
"We are ahead of many players here in the field in terms of expanding and
building up infrastructure," Chen said, noting the Atlanta-based firm has
committed over $600 million in the past three months for investment in China.
Of the total capital expenditure earmarked for China, about $500 million will be
used to expand infrastructure by building 20 new warehouse and distribution
facilities over the next two years. This will bring the total number of such
centers to 60 by the end of 2006, Chen said Friday.
UPS also plans to invest $100 million in expanding a joint-venture express
delivery company with Sinotrans Group, one of China's biggest express parcel
operators.
When the deal is concluded, UPS will own the company, making it the first
foreign company to have a wholly owned operation in the express parcel business
in China once Beijing has relaxed ownership rules in the sector at the end of
the year under the World Trade Organization (news - web sites).
Once that happens, Chen said, UPS will have wholly owned operations in 23
locations in China covering 200 cities.
UPS's expansion in China follows a banner year for the company's China
operations in 2004, when its export volume in the market doubled, reflecting the
country's surging economy.
Chen expects business volume from China to grow at a faster rate in 2005 than in
previous years.
"We grew 100 percent last year while growth in the year before was between 50
percent and 60 percent," Chen said.
"So if you take that trend and project it onto this year, the growth could be as
high as 200 percent," he said.
Chen said UPS' future expansion in China may involve acquisitions of either
international or local companies.
His bullish outlook for China contrasts with the firm's sluggish operating
environment in its home market, the United States, where the company makes the
bulk its revenue. UPS reported a mere 1.3 percent on-year rise in fourth-quarter
earnings from its overall operations, down from 20 percent in the third quarter,
due to competitive pressures.
In China, UPS provides international parcel express and logistics services. Its
main clients are multinational and foreign companies operating in China.
But Chen said foreign package companies, which are so far only allowed to
service international shipments, will be able to offer domestic delivery
services in China under the WTO.
"Basically, the entire market will be open and there will be a lot of
opportunities," Chen said.
Sources: AP
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GE Expects 5 bln USD in 2004 China Sales
General Electric Co. has forecast sales of 5 bln USD this year in China, a
five-fold increase since 2001, the official Xinhua news agency reported.
"We see double-digit growth across all sectors in China," GE chief executive for
the Asia-Pacific region, Steven Schneider, was quoted as saying. Schneider and
other GE executives were in Beijing to unveil the company's sponsorship of
China's national figure-skating team in the Beijing 2008 Olympic Games, Xinhua
said.
The sponsorship is part of GE's strategy to raise the company's brand
recognition in its largest and fastest-growing market. The company sells rail
and power equipment, airline engines, consumer finance and other goods and
services in China, according to the report.
China's Ministry of Railways and its subsidiary companies placed orders with GE
for both diesel locomotives and railroad signaling systems, Xinhua said, citing
comments from Luke Clemente, president of GE Transportation Systems (China) Co.
GE's sales in China reached 3.8 bln USD last year, up from 1 bln USD in 2001.
The company expects a 32 pct increase this year, Schneider told Xinhua. He
declined to give profit figures.
Sources: Xinhuanet
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World's Largest Auto parts Supplier to Set up Regional Base in Shanghai
Bosch, rated as the world's largest automotive parts supplier, will set up its
regional headquarters in Shanghai, said a corporate executive.
Rudolf Colm, a board member of the Stuttgart-based Bosch Group and president for
Asian-Pacific operations, said that Bosch has confidence in China's economic
growth and the conglomerate's investment in the country would exceed one billion
US dollars in the next two or three years.
A new office building is being planned to house the regional headquarters in the
future, said Colm. They would also move the headquarters of Bosch (China)
Investment Ltd from Beijing to Shanghai.
According to Colm, Bosch Group has so far founded 26 ventures in China, with a
total investment approaching 600 million US dollars. Out of Bosch's 40 billion
euros in global sale revenue last year, 1.4 billion euros are from sales in
China.
Shanghai is now home to regional headquarters of 86 multinationals, the
investment firms of 106 multinationals and the research and developments centers
of 130 multinationals, said Zhou Yupeng, vice mayor of Shanghai.
Sources: Xinhuanet
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Continental, American Win New China Flights
American Airlines and Continental Airlines on Tuesday won tentative
government approval to begin nonstop passenger service from the United States to
China, defeating Delta Air Lines for the right to serve a growing travel market.
American said it would begin flying from Chicago to Shanghai in April 2006.
Continental said it would fly between Newark, N.J., and Beijing, but did not
announce a start date.
United Airlines and Northwest Airlines already fly between the two countries.
The announcements by American and Continental came after the U.S. Department of
Transportation proposed granting them authority for the flights.
The agency also awarded new cargo service to FedEx, Northwest, Polar Air Cargo
and UPS.
The agency said it would issue a final decision on the awards after reviewing
comments on its proposals. The comments are due March 4.
China and the United States signed an aviation agreement last July to expand
service between the two countries and drop most restrictions on each other's
airlines.
The pact increases in stages in the next six years the numbers of passenger and
cargo flights allowed by Chinese and U.S. carriers.
Flights will rise over the period to 249 per week from the current 54.
The deal is intended to ease shortages of seats that have prompted complaints
from tourists and business travelers.
Other carriers that applied to become new entrants in the U.S.-China passenger
market in either 2005 or 2006 were Delta, Hawaiian Airlines and North American
Airlines. Evergreen International Airlines, Gemini Air Cargo and World Airways
applied for the all-cargo flights.
American CEO Gerard Arpey, expressed gratitude after the Fort Worth-based
carrier, the world's largest, was picked over the other carriers.
"For more than five years, we have wanted to fly to China and have believed that
American's service will provide the strongest possible competition in this
growing marketplace," Arpey said in a statement.
"This award for new service starting in 2006 will be a big breakthrough for us
in the Asian market."
American had lined up significant support in Congress, especially among
lawmakers from Texas and Illinois. The flights will link China to Chicago's
O'Hare Airport.
Larry Kellner, CEO at Houston-based Continental, said non-stop flights to
Beijing from the New York area would be a boon to business travelers.
Continental launched daily service between Newark and Hong Kong in March 2001.
Delta did not immediately return a call for comment. Hawaiian spokesman Keoni
Wagner said, "We're disappointed, but China remains an aspiration of ours."
Dan McKinnon, president of privately held North American, said his airline was
the only low-cost carrier in the bidding.
He said regulators seemed more concerned with American's ability to offer
competition against United on the Chicago-China route.
Sources: AP
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