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| July 2005 |
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| COMPANY IN ACTION |
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UPS Says China Is Company's Top Priority
UPS Inc., the world's largest shipping carrier, said that China is the
company's top priority and that the American firm was expanding flights and
facilities in the Asian nation that has become a manufacturing powerhouse.
"China isn't an option. It's essential. It's our No. 1 priority," John
Beystehner, chief operating officer at UPS, said at a conference hosted by the
Atlanta-based company.
Beystehner said the company plans to establish a hub in the Chinese financial
capital of Shanghai by 2007. The firm's 18 weekly flights in and out of China
would expand to 21 next year, he added.
By the end of this year, the company's China operations plans to have 3,500
employees, 1,400 vehicles and 75 facilities, Beystehner said.
UPS has also had strong growth in Hong Kong, where export volume grew by 20
percent in the second quarter, and Taiwan, where export volume rose by more than
25 percent, he said.
Rivals Fedex Corp. and DHL are also investing heavily in China.
Last month, Memphis, Tenn.-based Fedex Corp. said it would close its Asian hub
in the Philippines and replace it with a new $150 million facility in Guangzhou,
southern China.
Fedex predicts air freight from China to the United States will grow an average
of 9.6 percent a year over the next 20 years.
DHL, a unit of Bonn-based Deutsche Post AG, has said it's investing $215 million
in express and logistical infrastructure in China over the next five years.
Sources: Associated Press
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China's 'Google' Readies for Float
Baidu.com takes its name from a 900-year-old poem but its ambitions are
ultramodern -- to become the Chinese-language equivalent of Internet search
giant Google Inc.
Little known outside its home nation, five-year-old Baidu.com says it already is
the world's sixth most-visited Internet site, thanks to a strong following from
China's 100 million-plus Web surfers.
Now the startup founded by two Chinese veterans of American tech firms is
preparing to follow Google's example with an initial public offering in the
United States, hoping to raise $45 million.
Baidu.com is in the front ranks of an emerging group of Chinese companies that
are trying to create Internet services uniquely suited to their country's
ideogram-based language and the political restrictions of its government.
"Here's a homegrown company that has created what really is a very strong search
product," said David Wolf, managing director of Wolf Group Asia, a Beijing
consulting firm.
Baidu.com was founded in 2000 by Robin Li, who earned a master's degree in
computer science from the State University of New York at Buffalo and worked for
U.S. search engine firm Infoseek, and Eric Xu, a PhD from Texas A&M and a
veteran of American biotech firms. Xu later left the company.
The name -- pronounced "by doo" -- means "one hundred times." It comes from a
Song dynasty poem and refers to a man ardently searching for his lover in a
festival crowd.
Google bought 2.6 percent of Baidu.com last year in a move that outsiders
thought might lead to the American giant taking over the tiny Chinese startup.
But Baidu.com has stayed independent.
Google's influence shows, though, in Baidu.com's spare white site that is nearly
identical to the American firm's.
By contrast, competitor 3721.com -- bought in 2003 by U.S.-based Yahoo! -- is a
busier, colorful site with animated graphics.
Other early backers were U.S.-based venture capital firms including Draper
Fisher Jurvetson and the investment arm of International Data Group. Draper
Fisher is Baidu.com's biggest single shareholder, with a 28 percent stake.
Baidu.com's IPO is modest beside the $1.2 billion that Google's public offering
raised last August. But its tentative price for the block of shares being
offered values the whole Chinese company at $650 million.
The company says it already makes money -- some $303,000 in the three months
that ended on March 31.
China's communist government promotes Internet use for business and education.
But it also has launched the world's most sweeping effort to police what its
people can see online, blocking access to material deemed subversive or
pornographic.
The extent of the censorship controls has been highlighted by the changes that
foreign companies have made when they launch Chinese versions of commonly used
services.
Free-speech activists criticized Microsoft Corp when the blogging section of its
recently launched China-based Web portal rejected such words as democracy,
freedom and human rights, labeling them "forbidden language."
Google has also taken heat for blocking access to material that Chinese leaders
dislike. A search on Google's China-based service for such topics as Taiwan, the
Dalai Lama or the banned spiritual group Falun Gong returns a message that says
"site cannot be found."
And communist leaders, early believers in the Internet's economic promise, seem
intent on keeping foreign involvement to a minimum in order to keep the profits
for China's own firms.
Baidu.com's decision to stay independent could help it with intensely
nationalistic Chinese regulators, eliminating any doubts about divided
loyalties, said Wolf.
"It's a company that has grown up in the Chinese system. It's going to be a
favorite of a lot of partners here and an implicit favorite of the government
for that reason," he said.
Internet firms with foreign partners have been challenged by regulators who
demand assurances that Chinese managers will stay in place and not surrender
control to outsiders.
Daunting challenges
Baidu.com, 3721.com and other Chinese search engines also face daunting
linguistic challenges that designers working in English and most other languages
don't.
Chinese uses thousands of ideograms. On a computer, they usually are written by
typing words phonetically in Roman letters, then using special software to
convert them to characters.
Making things even more complex, the mainland's communist leaders simplified
many characters after the 1949 revolution, while Taiwan, Hong Kong, Singapore
and other societies use the old system.
So a search engine must sift through twice as many characters. And Chinese is
written without spaces between words, making it hard for a machine to figure out
where one ends and the next begins.
Then there are the quirks of a writing system with a vast literary history, 1
billion modern users and pressure to keep up with technology and international
commerce. Baidu.com's advertising notes that Chinese has 38 ways to say "I."
Financial analysts forecast fast growth but brutal competition in the industry
over the next few years, leaving only a handful of competitors.
Already, Baidu.com has been through a court battle with 3721.com after accusing
its rival of adding elements to its software that blocked users from reaching
the Baidu.com site.
A Beijing court ruled against 3721.com in April, ordering it stop such "unfair
competition."
The lawsuit "did much to reinforce Baidu's underdog image," said Wolf. "That
turned out to be very positive for them in China. It made people check them
out."
Sources: Associated Press
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Billionaire Mittal Breaks Into China
Mittal Steel may have been pipped at the post by Russian coal and steel company
Evraz Group for the Czech Republic's major steel maker, Vitkovice Steel, but the
company's CEO and world's third richest man, Lakshmi Mittal, didn't make his
money by hanging around licking his wounds. According to a media report released
today, the world's biggest steel maker has just made its first investment in
China, buying a 37% share of a state-owned steel mill. Yesterday the government
approved Mittal's $337 million purchase of shares in Valin Iron and Steel
according to the Xinhua News agency. China devours steel--last year the country
used 258 million tons of it, one-third of all steel produced worldwide, and
demand's expected to reach at least 310 million tons this year. But foreign
investment in China's industry remains slow-going. Mittal actually announced
plans to buy into Valin Group back in January.
Sources: Forbes
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World's Largest Home Improvement Retailer Due to Set up Presence in Shenzhen
Bill Patterson, Asia-Pacific President for Home Depot, the world¡¯s largest home
improvement retailer from the US, said his company would acquire a 20,000 to
30,000 square meter piece of land in Nanshan District, Shenzhen to open its
first standard outlet in China.
Home Depot has been devoted to its North American business since 1979. It now
owns over 1800 outlets in the US, Canada and Mexico and the world¡¯s largest
building material supermarket. The company only started making entry attempts in
Asia in recent years. It has picked China as its priority entry point in the
Asia-Pacific and has set up sourcing centers in Shanghai and Shenzhen in 2002.
Sources: FDI
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Wal-Mart to Nearly Double Stores in China
Wal-Mart Stores Inc., the world's biggest retailer, plans to open another 42
stores in China by the end of next year, nearly doubling its presence in the
country, a senior company official said Monday.
Lawrence Lee, Wal-Mart's operations director for eastern China, said the company
plans to have 90 outlets in China by the end of 2006 ¡ª up from the current 48 ¡ª
including one in Shanghai that will open Thursday.
The new Shanghai store is owned by Wal-Mart East China Stores Co., a joint
venture between Wal-Mart and China's CITIC Group. The venture also operates a
store in Nanjing.
Wal-Mart has no plan to have fully-owned operations in China, Lee said.
"Our partners help us in terms of government relations," said John Liu, senior
corporate affairs manager at Wal-Mart East China Stores.
Wal-Mart's ambitious plan for China highlights intensifying competition in the
country's retail sector as the economy booms.
Sources: Associated Press
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