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Setback for UK industrial sector Maintenance work took its toll on oil and gas production Industrial output in the UK marked its sharpest fall in five months during August, putting pressure on growth forecasts for the third quarter. Total industrial output fell 0.9% in August, according to the Office for National Statistics (ONS). Manufacturing output also fell unexpectedly, by 0.2%, the first drop since March. Even if output bounces back in September, the sector would take 0.15% off GDP growth, the ONS warned. Alleviating the plight of manufacturing, and countering the downward pressures on the economy, are now key priorities David Kern, economic adviser to the British Chambers of Commerce The decline was driven by a drop in oil and gas output, caused by routine maintenance work and a fire in one oil field. However, the ONS believes that industrial production will rebound in September. The Bank of England has predicted that the economy will grow by roughly the same 0.5% pace in the third quarter as it did in the second, but this forecast could now be under threat. In a widely expected move, the Bank held UK interest rates on hold at 4.5% on Thursday, but the problems faced by the manufacturing sector is leading some to call for rate cuts in the near future. "The manufacturing sector's acute underlying weaknesses reinforce our view that we will need further interest rate cuts later in the year," said David Kern, economic adviser to the British Chambers of Commerce (BCC). "Alleviating the plight of manufacturing, and countering the downward pressures on the economy, are now key priorities." /p>

China trade surplus set to triple Chinese textile exports have risen sharply since the start of the year China is forecasting a trade surplus of $90bn (£51bn) to $100bn this year, a threefold increase on 2004's $32bn. The Commerce Ministry said the surplus would be created by a predicted 30% jump in exports to $750bn, compared with a 18% rise in imports to $660bn. The figures are likely to further annoy the US, which has long argued that China's exports are unfairly helped by a deliberately undervalued yuan. Beijing agrees the surplus is too high, but says the yuan is only one factor. Domestic factor Bank of China governor Zhou Xiaochuan said the country also needed to do more to boost domestic demand so more goods stayed within the country. The yuan and US dollars The low value of the yuan has come in for strong criticism from the US "In the major global economies, the influence of domestic consumption on the trade balance is far greater than that of foreign exchange rate adjustments," he told Chinese financial magazine Caijing. "This is the situation in Japan, as well as the US." China increased the value of the yuan against the dollar by 2.1% in July and permitted it to trade within a narrow band, but the US wants the yuan to be allowed to trade freely. However, Beijing has made it clear that it will take its time and tread carefully before allowing the yuan to rise further in value. Clothing boom Chinese exports have particularly been driven this year by textiles and clothing items. Exports of such goods have shot up since the start of 2005, due to the ending of long-held global production level agreements. By August this saw Chinese clothing pile up at European ports after exceeding the EU's import quotas for the whole year. The impasse was removed after EU quotas were relaxed following talks between European Commission officials and their opposite numbers in Beijing. /p>

German gloom as output declines German economists had expected a smaller drop in output German industrial output fell 1.6% in August as surging oil prices brought economic gloom. The decline was bigger than analysts had expected and follows a 1.2% increase in July. The news comes as Germany struggles to form a stable government after last month's inconclusive general elections, which gave no party a clear mandate. The economy and labour ministry said that despite the latest fall, the trend in production was still upward. The output figure includes production at German factories, utilities, mines and construction sites. The German economy is forecast to grow around 1% this year, and the weak figure for Europe's biggest economy is acting as a drag on EU growth. /p>

Dongfeng Lays out Lofty Targets for 2005 Dongfeng Motor Corp, the State-run automaker seeking a Hong Kong stock listing, expects to sell more than 600,000 vehicles with a turnover exceeding 100 billion yuan (US$12.1 billion) this year. The goal was revealed by Dongfeng President Miao Wei in an interview with China Daily on Monday. "Our growth this year will be faster than that of the industry as a whole, which will put an end to consecutive declines of our domestic market share over the past years," Miao said. Dongfeng was dwarfed by two other State-run vehicle producers - Changan Motor Corp and Beijing Automotive Industry Corp - to become the nation's No 5 automaker last year from its previous ranking of No 3 in terms of unit sales. Its sales rose by a meagre 7 per cent year-on-year to 523,000 vehicles last year, Miao said. Dongfeng reported 93.2 billion yuan (US$11.2 billion) in turnover in 2004, an increase of 17 per cent over 2003. Miao predicted that total vehicle sales in China will grow by 10 to 15 per cent this year from 2004. However, sales of domestically-made vehicles declined by 6.94 per cent year-on-year to 684,500 units during the first two months of 2005, according to statistics from the China Association of Automobile Manufacturers. Vehicle output in China edged up 0.96 per cent to 739,200 units during the period. "We also expect Dongfeng's profits to continue to grow this year," Miao said, after they posted a 23 per cent climb last year. Figures on the company's website show it recorded 4.22 billion yuan (US$507 million) in profit last year. "However, we are facing great difficulties this year, such as mounting material prices, mainly from steel, declining car prices on the domestic market and the strong euro," Miao said. The biggest task for all automakers in China is to cut costs and maintain profit-making abilities, he said. "Some players are likely to go under due to the State's macro-economic controls," he added. Prices of domestically-made vehicles dropped by more than 13 per cent on average last year from 2003, in an effort by car makers to spur sales. Analysts say prices will continue to slide by some 10 per cent in 2005. On Dongfeng's expected listing in Hong Kong, Miao said: "Everything is in the process, but I can tell you nothing specific now... All assets of our core businesses, including those from our joint ventures (with foreign partners) will be incorporated into our new listed firm." It was reported that Dongfeng planned to go public in Hong Kong last year but was delayed due to the slowing domestic auto market. Dongfeng, which has a Shanghai-listed affiliate, runs four vehicle joint ventures with Japan's Honda and Nissan, PSA Peugeot Citroen of France and South Korea's Kia Motors. It also plans to build a 300,000-unit car joint venture with France's Renault, which controls 44 per cent of Nissan. But the project has been suspended mainly due to ongoing management reshuffling at Renault and Nissan, Miao said. "Things are expected to restart next month with the reshuffle completed," he said. Sales of vehicles made in China grew by 15.5 per cent year-on-year to 5.07 million units last year. But this was down from the 34 per cent of 2003, dragged by a number of factors, such as the State's macro-economic controls - especially those on car loans - high oil prices and consumers' reluctance to buy in anticipation of cheaper cars sparked by producers' frequent price cuts. (China Daily March 16, 2005) /p>

Shengli Oilfield Maintains Stable Production The Shengli Oilfield, the country's second largest oil field in east China's Shandong Province, turned out 26.74 million tons of crude oil in 2004, the highest in the past four years, according to the local source. Gas production hit 900 million cubic meters, the highest during the past six years, the source said. In addition, oil and gas reserves equivalent to 28.12 million tons were discovered last year, keeping the balance between extraction and the newly-increased reserves for eight years running. The oil field has curbed the decline in oil and gas production during the past few years after breakthrough has been made in the geological exploration theories. It has developed four sets of technologies dealing with various types of the covert geological layers for further oil and gas reserves. With the help of the unique theories, 646 million tons of oil reserves has been verified in the covert geological layers. Moreover, the oil field has stimulated the development of both the old and new production areas with additional production capacity topping 1.32 million tons and 1.28 million tons, respectively. (Xinhua News Agency March 7, 2005) /p>

The majority of China's 523 iron ore importers will be shut out of the world market by a higher threshold on qualifications for importers, which was created last week and will be implemented on May 1. But this will not necessarily lead to a decline in iron ore imports this year, said Luo Bingsheng, executive vice-chairman of the China Iron & Steel Association (CISA). "We are now checking the qualifications of the importers according to 10 minimum qualification requirements, and those who fail to meet the requirements will lose their import rights," Luo, also a member of the Chinese People's Political Consultative Conference (CPPCC), said on the sidelines of the ongoing CPPCC meeting. The association worked out the requirements jointly with the China Chamber of Commerce of Metals, Minerals and Chemical Importers and Exporters last week. Luo said steel enterprises responded actively to the move. The move will support the Ministry of Commerce's new automatic import licence system on iron ore imports implemented on March 1. Although he did not elaborate on the requirements, he said the target is to allow only large enterprises to reserve the right to bargain in the world market. "We aim to build normal trade order through standardizing the market and competition," he said. "We had too many importers." Without effective coordination, the steel industry endured blind imports, fierce competition and a push in prices over the past few years, especially in 2004. "If, for example, we had only around 100 importers, it would be much easier for us to implement coordination and to strengthen self-discipline to curb blind competition," Luo said. A lack of coordination and unhealthy competition are blamed for Chinese buyers' weak bargaining power in price negotiations with foreign suppliers, despite the fact that China is currently the largest importer of iron ore in the world, with its import volume surging by over 40 per cent last year to hit 208 million tons. A frequently cited example was that on February 28, Shanghai Baosteel Group, on behalf of 13 Chinese steel mills, followed Japanese steel firms in agreeing to a 71.5 per cent price hike for iron ore this year with Australian and Brazilian suppliers. "Through better coordination and self-discipline, we can speak louder in the world market," Luo said. The surging price will vigorously stimulate domestic production of iron ore this year, he said. In January alone, iron ore production in China increased by 5.12 million tons, a jump of 31 percent year-on-year. Meanwhile, steel firms will first digest the 40 million tons of iron ore stocks piled up in Chinese harbours. "As a result, it is very likely that China's iron ore import volume this year will be below earlier expectations," Luo said. Moreover, the tight supply situation in the global iron ore market might reverse in the coming years as the world's three major producers plan to increase their production capacity by 120 million tons in three to five years. "We may even witness an oversupply in the market, which is not good for the suppliers," Luo said. "Big (price) ups are always followed by sharp downs." However, he admitted that the domestic steel price will remain at a high level due to the iron ore price hike and the estimated 20 percent price gap between the domestic and international market. "Prices for some steel products have already gone up," he said. "I think that's normal." (China Daily March 7, 2005) /p>

Fewer Steel Products Imported in 2004 The gap between China's steel imports and exports narrowed last year, but analysts say the nation will continue to be a net steel importer over the next few years. China imported 29.3 million tons of steel products last year, down 7.87 million tons or 21.2 percent year-on-year, according to statistics released Monday by the China Iron and Steel Association. This was the first year-on-year drop in China's steel product imports over the past six years, the association said. In contrast, China's steel product exports leapt 104.6 percent, or 6.06 million tons, to 14.23 million tons last year from 2003, according to statistics. China also became a net steel billet exporter, exporting 6.06 million tons and importing 3.86 million tons of steel billets. "The tumble in our steel imports and the sharp growth in exports mainly resulted from higher international steel prices than in the domestic market," Luo Bingsheng, vice-chairman of the association, told a press conference yesterday in Beijing. Steel prices in the international market were some 30 percent higher than the average price in the domestic market last year, Luo said. "The changes in our steel imports and exports also signal that Chinese steel makers, especially big ones, are becoming increasingly internationally competitive," he said. "We should set our eyes on both the domestic and international markets," he added. However, senior officials at the association said earlier that China will remain a net steel importer in the years to come. The nation's net steel imports totalled 13.83 million tons last year, down from 36.55 million tons in 2003. Luo stressed China remained the world's biggest steel importer last year, despite the drop in imports. "China's position as a major net steel importer will not be altered in the short term as its steel industry will continue to depend on the domestic market," said Zhou Xizeng, an analyst with CITIC Securities Co Ltd. "Domestic steel demand will remain on a steady growth track in coming years as a result of the nation's booming industrialization," Zhou told China Daily. Steel demand in China rose 13 percent to 312 million tons last year over 2003, statistics showed. The nation's output of steel products reached 297.23 million tons last year, an increase of 23.29 percent. Zhou said that the gap between China's steel imports and exports is much larger in terms of value than it is in terms of quantity. High-value-added products, such as steel plates, accounted for 85.6 percent of China's total steel imports last year, compared with 40.6 percent of steel exports, according to statistics. Luo said that overheating investment in the steel industry was cooled down last year thanks to the central government's macro-economic controls. Fixed asset investment in the industry climbed 26.9 percent year-on-year in 2004 to 178.08 billion yuan (US$21.51 billion). The growth rate dived by 65.5 percentage points year-on-year. New steel-making capacity of more than 55 million tons was built in China last year. Domestic steel makers reported record profits last year boosted by strong sales and high steel prices, Luo said. Profits made by the association's 166 member companies surged 68.31 percent year-on-year to 81.18 billion yuan (US$9.8 billion) last year on sales of 1 trillion yuan (US$121.4 billion). (China Daily February 1, 2005) /p>

Changzhou to Seek Global Investors for 112 Projects Changzhou, an industrial city in east China's Jiangsu Province, is planning to seek investors worldwide for 112 projects covering trade, tourism, logistics, education, medical care and urban construction in 2005. The Changzhou municipal government held a press conference for the 112 planned projects recently in Shanghai. The conference attracted more than 150 business representatives and consuls from China's trade-partner countries in Europe, Americas and Asia, said sources with the Changzhou government. Overseas investors are welcomed to participate in these projects, which may take the form of a joint venture or a solely-funded business, said the municipal government. As a key industrial city in the Shanghai-centered Yangtze River Delta, Changzhou attracted more than 2.2 billion US dollars worth of overseas investment in 2004, 8 percent over a year earlier. Of the total, 650 million US dollars has been realized. The Changzhou government said the city clinched 129 large foreign-funded projects in 2004, each involving at least 10 million dollars of investment. Among them are several operations of Global Top 500 corporations. (Xinhua News Agency February 1, 2005) /p>

VW, GM Continue to Lead Chinese Market The list of top 10 automakers in China was reshuffled in 2004. But Volkswagen and General Motors have maintained their leading position in the world's most potent market. Volkswagen's Shanghai branch tops the list, with an annual output of 347,000 units, and 355,000 units sold. It boasts of the second-largest market share, in a joint venture with First Automotive Works. GM's Shanghai branch follows VW's two branches. Figures also show that the top ten automakers' market share dropped in 2004. Their total output accounts for 72 percent of the market, while sales covering 75 percent, down 6.5 and 5.2 percent, respectively. (CCTV.com January 31, 2005) /p>

Russian and US energy leaders to meet on relatively equal footing

29-09-02 Russian oil companies are increasingly warming to their US counterparts, but some old demons still chill those relationships. The striking turnaround from the adversarial standoffs of the early 1990s increases the chances that Russia could someday live up to the hopes that have long drawn companies to tap the country's oil and gas bounty. The steps needed to address those issues will lead the agenda of a two-day summit of top Russian and US energy and trade leaders beginning at Rice University. The meeting will be the first such gathering under the Bush administration of the US secretaries of energy and commerce and their Russian counterparts. Officials hope it will further strengthen ties as both countries reach out to each other on a number of political and economic fronts. "This is about fostering economic growth, not only in Russia but around the world," US Secretary of Commerce Donald Evans said. "Russia is, and will continue to be, a growing important supplier of world crude. It is important Russia play a strategic role in diversity of the supply of world oil."

The strategic significance of oil goes far beyond Russia's need for economic growth. The meeting will take place against a backdrop of a pending war between the United States and Iraq and oil prices that have stayed above $ 30 a barrel. Russia, which rivals Saudi Arabia as the world's largest oil producer, is seeking Western investment and expertise to further develop its massive reserves while working to reform its energy sector to create companies that rival multinationals such as Shell Group and BP. The United States is looking for a new, reliable source of oil that is not subject to the Middle East's turmoil. For its part, Russia has indicated it would like nothing more than to begin regular shipments of its oil to the United States, but it lacks the ability to do so on a large scale. "This is a historic opportunity because at the highest levels of government, you have a political alliance and friendship that has been clearly and publicly delineated," said Amy Jaffe, energy policy analyst at Rice University's James A. Baker II Institute for Public Policy. "Now the question is, how do we translate that friendship into the commercial sphere?"

Russian oil exports have steadily risen since 1993, when they bottomed out at 3.2 mm bpd. They are projected to climb to just over 5 mm bpd by year's end, according to the Energy Information Administration, the research arm of the US Department of Energy. In comparison, the Saudis export about 7 mm bpd of oil. Many companies, including most of the US major oil concerns, got burned in Russia after the fall of the Berlin Wall, when the privatisation of the Russian oil industry was just beginning after decades of government control. Onerous taxes and murky contract laws sank deals that often appeared promising. That era seems to have passed. Evans noted that substantial US capital is already moving into Russia on ventures such as the Caspian Sea Pipeline Project, a crude oil line that will move Caspian Sea oil to the west, and Sakhalin Island, off Russia's eastern shore, where US companies want to drill. "There are other fields that I know a lot of American companies have interest in, but there needs to be a little more certainty as to what the tax structure will be for companies to invest in those fields," Evans said. "We can encourage this development in Russia. They have made great progress in improving the climate, and this will be a chance to highlight that."

The Russian oil industry has learned what it takes to attract Western money. "The Russian companies increasingly understand that their best potential for future capital is to be publicly traded, and that is pushing them toward more standardized business practices and transparency, all of the things they need when they go on the road to New York or London," Jaffe said. Long-time observers in Russia are hopeful about the changes but warn that US companies can never expect to do business strictly on their own terms. "If there is one thing you can say about investing in Russia, you never know as much about the other side as you want to know," said Toby Gati, a senior international adviser to the law firm of Akin, Gump, Strauss, Hauer & Feld. "There are things in Russia that have to change, things that will change slowly and things that will never change."

What sets this meeting apart is that it will be the first time the two countries' oil leaders meet on relatively equal footing. Its oil has given Russia new leverage in the international economy, even to the point where it challenged the power of OPEC when the cartel insisted it remove production, although that confrontation was short-lived. Russia may be warming up more to Western companies, or more specifically Western dollars, but there continues to be resistance to permitting Western companies unfettered access to Russian oil and gas reserves. There is a long-running disagreement over the kinds of deals for oil and gas exploration that the Russians wantto make, as opposed to those sought by Western companies. Western companies would like to strike production-sharing agreements, under which they are guaranteed larger profits and a certain share of a field's production. The Russians, however, favour a joint-venture arrangement where any outside company would have to share profits with a Russian company, which is a more complicated relationship.

There are hundreds of proposed production-sharing agreements collecting dust at the Duma, Russia's legislative body. Proposed legislation to streamline the process of issuing production-sharing agreements has also been sidelined. Historically, Russians viewed deals with Western companies as a zero-sum game: If they were not getting the upper hand, they felt they had been short-changed. That stance has softened, Gati said. "The win-win concept is relatively new to Russia," Gati said. The strategy Russian and Western oil companies are pursuing has drawn its share of criticism, especially from environmentalists, but economic and political observers generally support closer ties between the former enemies. Still, not everyone is celebrating this new friendship. Environmentalists warn that the Russian oil industry is an ecological disaster, and Western companies are eager to profit from the lax standards and correct those long-standing problems. "This energy summit is creating an unholy alliance between Russia's worst oligarchs and polluters and multinational oil companies that are racing around the world in search of countries with low environmental standards," said David Gordon, associate director of the non-profit environmental group Pacific Environment.

Source: Houston Chronicle - Knigt Ridder/Tribune Business News /p>

Joint Session of the Russian-Turkish and Turkish-Russian Business Councils

On January 12 a joint session of the Russian-Turkish and Turkish-Russian Business Councils took place at the Congress Centre of the Russian CCI. Taking part in the session were Evgeni Primakov, RF CCI President, Turkey’s Prime-Minister R.Tayyip Erdogan, Rifat Hisargiklyoglu, President of the Union of Trade, Industrial and Marine chambers and exchanges, Viktor Khristenko, RF Industry and Power Minister, Georgi Petrov, RF CCI Vice-President, Turkey’s State Minister Kyurshat Tyuzmen, Aleksandr Lebedev, Chairman of the Russian-Turkish Business Council, Turgut Gyur, Chairman of the Turkish-Russian Business Council and others.

By way of introduction Evgeni Primakov greeted all the participants of the session at the premises of Russia’s CCI. “It gives me special satisfaction to say that very important delegations of Russian and Turkish entrepreneurs are attending this first joint session,”- he said- “because trade and economic relations are a kind of a locomotive that is taking forward the train of our good-neighbourly relations with Turkey.“

Evgeni Primakov assessed the dynamics of development of Russia’s and Turkish trade and economic relations as positive. If mutual trade turnover in 1990 amounted to $1.5bln, by 2004 it amounted to $11bln, and prospects were good enough for increasing it to $15bln.

According to Primakov, the leaders of both states outlined horizons of development of political and economic relations between Russia and Turkey were at their December 2004 summit.

Evgeni Primakov then said that fuel and energy carriers amounted to 65 per cent to 70 per cent of Russian exports to Turkey, and thus one of the top priorities of the Chambers of commerce and industry for Russia and Turkey was changing the structure of trade turnover. Both sides are interested in the development of science-intensive manufacturing.

He also called intensification of inter-regional contacts one of the priorities of cooperation. He stressed that Russia is wider than Moscow and the Moscow region. Russia’s CCI has a membership of 168 territorial chambers in Russia’s different regions and municipalities.

- Economic rapprochement is linked to the growth of trust at the state level. President Putin has cited our relations with Turkey as an example, and there are all reasons for that,”- Evgeni Primakov said.

In his speech Turkey’s Prime-Minister R.Tayyip Erdogan stressed that the attention given to the Joint Council by politicians in both countries is evidence that they have joint will for development of bilateral relations.

- Our nations are getting closer, -Erdogan said. – “Russia is a friend to whom we pay especial attention, and our relationships are developing in the highest positive degree. During his visit to Turkey in December of 2004 President Putin indicated there was an opportunity of a transfer to a level of multilateral cooperation."

Turkey’s Prime Minister said that Russia is his country‘s second most important economic partner of Turkey. Relationships were developing dynamically over the past several years, but to secure further development they need to have mutual investment and creation of an infrastructure, including the activities of Business Councils that are to further economic and trade relationships between the two countries and supply of relevant information. Especial significance in the activities of Business Councils is given to strengthening of ties and cooperation between small- and medium-sized Russian and Turkish companies.

Viktor Khristenko, Russia’s Industry and Power Minister in his capacity as the chairman of the Russian chapter of the Intergovernmental Commission said that meetings of Russian and Turkish partners have become regular, with the level of contacts and their intensity reaching its apex. In his view that was very precious because nothing can be earned for as long and lost as fast as trust. He stressed the hugeness of dynamics and the large scale of relations between the two countries.

Turkish Prime-Minister said that Russia was his country’s second biggest economic partner. Relationships were developing dynamically over the past several years, but to further their development its would take mutual investments and creation of an infrastructure, including Business Councils that are to promote economic and trade relations between the two countries and ensure supply of the relevant information. Strengthening ties and cooperation of medium-a and small-sized businesses is being given an especial attention. Viktor Khristenko also named natural gas and petroleum-producing industries as well as electrical power production as priority directions of cooperation. Each of those, he said had a base for long-term cooperation in both developing the extraction directions and processing and science-intensive areas and investments.

He then outlined in details the issues of balancing trade and economic relations speaking about the need to liquidate red tape and reduce the burden on business, ridding of discrimination. The Russian-Turkish Business Council plays an enormous role in that he said, generating success and voicing problems.

Turkey’s State Minister, Chairman of the Turkish leg of the Intergovernmental Commission Kyurshat Tyuzmen said that further productive activities required creation of consulting mechanisms, more frequent meetings and faster problem solving measures. To have these there was everything – experience, know-how and the many-century –old history of Russia-Turkey relations.

Rifat Hisargiklyoglu, President of the Union of Trade, Industrial and Marine Chambers and Exchanges said that relations with Russia have especial significance for Turkey and that there was the wish to develop them further, given that there are no political differences between the two countries. The Joint Business Council plans to continue its work exactly in this direction.

Aleksandr Lebedev, Chairman of the Russian-Turkish Business Council said that his organization had been set up recently but it was set up to act. The joint declaration signed by Russia’s and Turkey’s presidents includes clauses on partnerships. To fill the official paper with real activities and strengthen trade and economic ties is what the Council should do.

Two documents were signed at the session – the Agreement on Cooperation between Russia’s CCI and Turkey’s Union of trade, industrial and marine chambers and exchanges, and the Protocol on Cooperation between the Russian-Turkish and the Turkish-Russian Business Councils.

Russia’s CCI President Evgeni Primakov and President of Turkey’s Trade, Industrial and Marine Chambers and Exchanges Rifat Hisargiklyoglu signed the agreement on cooperation.

Source: http://eng.tpprf.ru /p>

Shougang Group Reports Profits of US$150 Million

Shougang Group Corporation, one of China's leading steel products maker, announced Thursday that it has earn a record 1.25 billion yuan (about US$150 million) after taxes last year, up 21.6 percent on a year-on-year basis.

The corporation did 61.9 billion yuan (US$7.46 billion) in sales in the past year, a rise of 39.9 percent from that of 2003.

A corporate executive ascribed the company's achievement to its substantial efforts in producing more high-tech steel products, adjusting production capacity mix, revamping the administration and laying off surplus workforce.

In 2004 alone, Shougang Group Corp., with the headquarters in western Beijing, used 1.3 billion yuan (US$157 million) on scientific and technological upgrading programs. High-tech rolled steel with high added value made up 55.7 percent of the corporation's total output in 2004 or showed a rise of 42.2 percent from the previous year. /p>

Hurray! Plans Listing on NASDAQ

Chinese mobile messaging service provider Hurray! Holdings Co Ltd planned to float its shares on the NASDAQ stock market, amid an industrial slowdown and structural changes.

Hurray! made a filing to the US Securities and Exchange Commission on Wednesday (US Eastern Time), indicating that it aims to sell 6.88 million American depository shares (ADSs) on the high-tech NASDAQ and is expected to raise as much as US$79.81 million from the initial public offering.

The company will become the seventh NASDAQ-listed Chinese company. It is focused on mobile value-added service business.

The flotation is priced between US$9.6 to US$11.6 and the exact date of the offering was not provided.

CitiGroup is leading the effort with assistance from Piper Jaffray and ThinkEquity Partners LLC.

The underwriters also have an option to sell another 1.032 million shares.

A spokesperson for Hurray! said her company is working on the listing and some executives are already out on a road show, but she declined to give more information.

Hurray!'s offering comes at a difficult time for mobile value-added service providers, who have faced an industry slowdown.

Zhou Yi, an analyst with the Beijing-based market research firm Analysys, predicted that the market will see growth of less than 30 percent this year.

Analysys said the market grew to 30 billion yuan (US$3.6 billion) in 2004, increasing by 60 percent, a record low since 2001.

The slowdown comes after a regulatory campaign from the Chinese Government on stopping the spread of illegal and pornographic content through mobile phones.

Beijing-based Mtone, one of several hot NASDAQ-listing candidates last year, was punished by China Mobile for sending "unhealthy content" and its multimedia messaging service was suspended for a year in September.

The company had to scrap its flotation plans due to the punishment.

The country's two dominant mobile operators, China Mobile and China Unicom, also started to stop service providers from charging subscribers without their consent.

The move also led to a sharp decrease in providers' revenues from mobile messages, especially text messages.

However, Jim Sun, an Internet and telecom analyst with Shanghai-based Evolution Securities believes that Hurray!'s offering might be attractive.

Hurray! is the biggest service provider on the network of China Unicom, a minor mobile operator, and the environment of the value-added service business on its network is much cleaner and less impacted by regulatory campaigns. That means Hurray!'s business may have better ability to offset policy changes, he said.

Another attractive point of Hurray! is that its business is mainly focused on wireless application protocol or WAP, which allows mobile phone users to download ring tones, pictures through a mobile network, or surf the mobile Internet.

Evolutions Securities' statistics show Hurray! was the second biggest WAP operator in China in September with 14 percent of market share, after NASDAQ-listed, Kongzhong Corp.

Sun said the WAP market jumped sharply last year to US$140 million from US$24 million in 2003, and is forecast to grow to US$250 million this year. /p>

Overseas Firms Move on Group Insurance Market

Foreign insurers are making rapid headway in China's lucrative group insurance market, displaying strong competitiveness in this newly opened sector.

Days after it clinched regulatory approval to broaden its business scope, Sino-British insurer AVIVA-COFCO Life Insurance Co wrote its first group insurance policies on Wednesday, which it said were the first among foreign or Sino-foreign life insurers operating in China.

Pacific Antai Life Insurance Co Ltd and Nissay-SVA Life Insurance Co Ltd are reportedly also among the first batch of several foreign insurers that were approved to sell group life insurance.

Honouring pledges it made upon joining the World Trade Organization in 2002, China lifted all geographical and business scope restrictions on foreign insurers in December, opening key businesses such as group insurance, health insurance and annuities.

"We really take pride in having taken the nation's first group contracts by foreign insurers," said AVIVA-COFCO President Eric Chang.

The insurer sold its first three group insurance policies to China National Cereals, oils & Foodstuffs Import & Export Corp (COFCO), its Chinese shareholder, Baijia Food Co Ltd and Guowang Technology Co Ltd.

AVIVA-COFCO is a 50-50 joint venture between British insurance giant Aviva Plc and the State-owned COFCO, a leading foodstuffs trader. It was established in January 2003 in Guangzhou, capital of south China's Guangdong Province.

It set up two branches last year in Beijing and Chengdu, capital of Southwest China's Sichuan Province.

There are currently 18 Sino-foreign insurance joint ventures like AVIVA-COFCO operating in China. By mostly partnering with leading local companies, these foreign insurers have gained a major foothold in the lucrative group insurance market, analysts say.

Such a model is likely to prove a powerful weapon for joint venture insurers in China's group insurance market, and may greatly change the market's landscape in a couple of years, they say.

Qu Juwu, the human resources director of AS-SC Investment Management Co Ltd, which owns Baijia Food, said it had quit a Chinese insurer for the better services provided by AVIVA-COFCO. /p>

Dongfeng Lays out Lofty Targets for 2005 Dongfeng Motor Corp, the State-run automaker seeking a Hong Kong stock listing, expects to sell more than 600,000 vehicles with a turnover exceeding 100 billion yuan (US$12.1 billion) this year. The goal was revealed by Dongfeng President Miao Wei in an interview with China Daily on Monday. "Our growth this year will be faster than that of the industry as a whole, which will put an end to consecutive declines of our domestic market share over the past years," Miao said. Dongfeng was dwarfed by two other State-run vehicle producers - Changan Motor Corp and Beijing Automotive Industry Corp - to become the nation's No 5 automaker last year from its previous ranking of No 3 in terms of unit sales. Its sales rose by a meagre 7 per cent year-on-year to 523,000 vehicles last year, Miao said. Dongfeng reported 93.2 billion yuan (US$11.2 billion) in turnover in 2004, an increase of 17 per cent over 2003. Miao predicted that total vehicle sales in China will grow by 10 to 15 per cent this year from 2004. However, sales of domestically-made vehicles declined by 6.94 per cent year-on-year to 684,500 units during the first two months of 2005, according to statistics from the China Association of Automobile Manufacturers. Vehicle output in China edged up 0.96 per cent to 739,200 units during the period. "We also expect Dongfeng's profits to continue to grow this year," Miao said, after they posted a 23 per cent climb last year. Figures on the company's website show it recorded 4.22 billion yuan (US$507 million) in profit last year. "However, we are facing great difficulties this year, such as mounting material prices, mainly from steel, declining car prices on the domestic market and the strong euro," Miao said. The biggest task for all automakers in China is to cut costs and maintain profit-making abilities, he said. "Some players are likely to go under due to the State's macro-economic controls," he added. Prices of domestically-made vehicles dropped by more than 13 per cent on average last year from 2003, in an effort by car makers to spur sales. Analysts say prices will continue to slide by some 10 per cent in 2005. On Dongfeng's expected listing in Hong Kong, Miao said: "Everything is in the process, but I can tell you nothing specific now... All assets of our core businesses, including those from our joint ventures (with foreign partners) will be incorporated into our new listed firm." It was reported that Dongfeng planned to go public in Hong Kong last year but was delayed due to the slowing domestic auto market. Dongfeng, which has a Shanghai-listed affiliate, runs four vehicle joint ventures with Japan's Honda and Nissan, PSA Peugeot Citroen of France and South Korea's Kia Motors. It also plans to build a 300,000-unit car joint venture with France's Renault, which controls 44 per cent of Nissan. But the project has been suspended mainly due to ongoing management reshuffling at Renault and Nissan, Miao said. "Things are expected to restart next month with the reshuffle completed," he said. Sales of vehicles made in China grew by 15.5 per cent year-on-year to 5.07 million units last year. But this was down from the 34 per cent of 2003, dragged by a number of factors, such as the State's macro-economic controls - especially those on car loans - high oil prices and consumers' reluctance to buy in anticipation of cheaper cars sparked by producers' frequent price cuts. (China Daily March 16, 2005) /p>

Shengli Oilfield Maintains Stable Production The Shengli Oilfield, the country's second largest oil field in east China's Shandong Province, turned out 26.74 million tons of crude oil in 2004, the highest in the past four years, according to the local source. Gas production hit 900 million cubic meters, the highest during the past six years, the source said. In addition, oil and gas reserves equivalent to 28.12 million tons were discovered last year, keeping the balance between extraction and the newly-increased reserves for eight years running. The oil field has curbed the decline in oil and gas production during the past few years after breakthrough has been made in the geological exploration theories. It has developed four sets of technologies dealing with various types of the covert geological layers for further oil and gas reserves. With the help of the unique theories, 646 million tons of oil reserves has been verified in the covert geological layers. Moreover, the oil field has stimulated the development of both the old and new production areas with additional production capacity topping 1.32 million tons and 1.28 million tons, respectively. (Xinhua News Agency March 7, 2005) /p>

The majority of China's 523 iron ore importers will be shut out of the world market by a higher threshold on qualifications for importers, which was created last week and will be implemented on May 1. But this will not necessarily lead to a decline in iron ore imports this year, said Luo Bingsheng, executive vice-chairman of the China Iron & Steel Association (CISA). "We are now checking the qualifications of the importers according to 10 minimum qualification requirements, and those who fail to meet the requirements will lose their import rights," Luo, also a member of the Chinese People's Political Consultative Conference (CPPCC), said on the sidelines of the ongoing CPPCC meeting. The association worked out the requirements jointly with the China Chamber of Commerce of Metals, Minerals and Chemical Importers and Exporters last week. Luo said steel enterprises responded actively to the move. The move will support the Ministry of Commerce's new automatic import licence system on iron ore imports implemented on March 1. Although he did not elaborate on the requirements, he said the target is to allow only large enterprises to reserve the right to bargain in the world market. "We aim to build normal trade order through standardizing the market and competition," he said. "We had too many importers." Without effective coordination, the steel industry endured blind imports, fierce competition and a push in prices over the past few years, especially in 2004. "If, for example, we had only around 100 importers, it would be much easier for us to implement coordination and to strengthen self-discipline to curb blind competition," Luo said. A lack of coordination and unhealthy competition are blamed for Chinese buyers' weak bargaining power in price negotiations with foreign suppliers, despite the fact that China is currently the largest importer of iron ore in the world, with its import volume surging by over 40 per cent last year to hit 208 million tons. A frequently cited example was that on February 28, Shanghai Baosteel Group, on behalf of 13 Chinese steel mills, followed Japanese steel firms in agreeing to a 71.5 per cent price hike for iron ore this year with Australian and Brazilian suppliers. "Through better coordination and self-discipline, we can speak louder in the world market," Luo said. The surging price will vigorously stimulate domestic production of iron ore this year, he said. In January alone, iron ore production in China increased by 5.12 million tons, a jump of 31 percent year-on-year. Meanwhile, steel firms will first digest the 40 million tons of iron ore stocks piled up in Chinese harbours. "As a result, it is very likely that China's iron ore import volume this year will be below earlier expectations," Luo said. Moreover, the tight supply situation in the global iron ore market might reverse in the coming years as the world's three major producers plan to increase their production capacity by 120 million tons in three to five years. "We may even witness an oversupply in the market, which is not good for the suppliers," Luo said. "Big (price) ups are always followed by sharp downs." However, he admitted that the domestic steel price will remain at a high level due to the iron ore price hike and the estimated 20 percent price gap between the domestic and international market. "Prices for some steel products have already gone up," he said. "I think that's normal." (China Daily March 7, 2005) /p>

Fewer Steel Products Imported in 2004 The gap between China's steel imports and exports narrowed last year, but analysts say the nation will continue to be a net steel importer over the next few years. China imported 29.3 million tons of steel products last year, down 7.87 million tons or 21.2 percent year-on-year, according to statistics released Monday by the China Iron and Steel Association. This was the first year-on-year drop in China's steel product imports over the past six years, the association said. In contrast, China's steel product exports leapt 104.6 percent, or 6.06 million tons, to 14.23 million tons last year from 2003, according to statistics. China also became a net steel billet exporter, exporting 6.06 million tons and importing 3.86 million tons of steel billets. "The tumble in our steel imports and the sharp growth in exports mainly resulted from higher international steel prices than in the domestic market," Luo Bingsheng, vice-chairman of the association, told a press conference yesterday in Beijing. Steel prices in the international market were some 30 percent higher than the average price in the domestic market last year, Luo said. "The changes in our steel imports and exports also signal that Chinese steel makers, especially big ones, are becoming increasingly internationally competitive," he said. "We should set our eyes on both the domestic and international markets," he added. However, senior officials at the association said earlier that China will remain a net steel importer in the years to come. The nation's net steel imports totalled 13.83 million tons last year, down from 36.55 million tons in 2003. Luo stressed China remained the world's biggest steel importer last year, despite the drop in imports. "China's position as a major net steel importer will not be altered in the short term as its steel industry will continue to depend on the domestic market," said Zhou Xizeng, an analyst with CITIC Securities Co Ltd. "Domestic steel demand will remain on a steady growth track in coming years as a result of the nation's booming industrialization," Zhou told China Daily. Steel demand in China rose 13 percent to 312 million tons last year over 2003, statistics showed. The nation's output of steel products reached 297.23 million tons last year, an increase of 23.29 percent. Zhou said that the gap between China's steel imports and exports is much larger in terms of value than it is in terms of quantity. High-value-added products, such as steel plates, accounted for 85.6 percent of China's total steel imports last year, compared with 40.6 percent of steel exports, according to statistics. Luo said that overheating investment in the steel industry was cooled down last year thanks to the central government's macro-economic controls. Fixed asset investment in the industry climbed 26.9 percent year-on-year in 2004 to 178.08 billion yuan (US$21.51 billion). The growth rate dived by 65.5 percentage points year-on-year. New steel-making capacity of more than 55 million tons was built in China last year. Domestic steel makers reported record profits last year boosted by strong sales and high steel prices, Luo said. Profits made by the association's 166 member companies surged 68.31 percent year-on-year to 81.18 billion yuan (US$9.8 billion) last year on sales of 1 trillion yuan (US$121.4 billion). (China Daily February 1, 2005) /p>

Changzhou to Seek Global Investors for 112 Projects Changzhou, an industrial city in east China's Jiangsu Province, is planning to seek investors worldwide for 112 projects covering trade, tourism, logistics, education, medical care and urban construction in 2005. The Changzhou municipal government held a press conference for the 112 planned projects recently in Shanghai. The conference attracted more than 150 business representatives and consuls from China's trade-partner countries in Europe, Americas and Asia, said sources with the Changzhou government. Overseas investors are welcomed to participate in these projects, which may take the form of a joint venture or a solely-funded business, said the municipal government. As a key industrial city in the Shanghai-centered Yangtze River Delta, Changzhou attracted more than 2.2 billion US dollars worth of overseas investment in 2004, 8 percent over a year earlier. Of the total, 650 million US dollars has been realized. The Changzhou government said the city clinched 129 large foreign-funded projects in 2004, each involving at least 10 million dollars of investment. Among them are several operations of Global Top 500 corporations. (Xinhua News Agency February 1, 2005) /p>

VW, GM Continue to Lead Chinese Market The list of top 10 automakers in China was reshuffled in 2004. But Volkswagen and General Motors have maintained their leading position in the world's most potent market. Volkswagen's Shanghai branch tops the list, with an annual output of 347,000 units, and 355,000 units sold. It boasts of the second-largest market share, in a joint venture with First Automotive Works. GM's Shanghai branch follows VW's two branches. Figures also show that the top ten automakers' market share dropped in 2004. Their total output accounts for 72 percent of the market, while sales covering 75 percent, down 6.5 and 5.2 percent, respectively. (CCTV.com January 31, 2005) /p>

Russian and US energy leaders to meet on relatively equal footing

29-09-02 Russian oil companies are increasingly warming to their US counterparts, but some old demons still chill those relationships. The striking turnaround from the adversarial standoffs of the early 1990s increases the chances that Russia could someday live up to the hopes that have long drawn companies to tap the country's oil and gas bounty. The steps needed to address those issues will lead the agenda of a two-day summit of top Russian and US energy and trade leaders beginning at Rice University. The meeting will be the first such gathering under the Bush administration of the US secretaries of energy and commerce and their Russian counterparts. Officials hope it will further strengthen ties as both countries reach out to each other on a number of political and economic fronts. "This is about fostering economic growth, not only in Russia but around the world," US Secretary of Commerce Donald Evans said. "Russia is, and will continue to be, a growing important supplier of world crude. It is important Russia play a strategic role in diversity of the supply of world oil."

The strategic significance of oil goes far beyond Russia's need for economic growth. The meeting will take place against a backdrop of a pending war between the United States and Iraq and oil prices that have stayed above $ 30 a barrel. Russia, which rivals Saudi Arabia as the world's largest oil producer, is seeking Western investment and expertise to further develop its massive reserves while working to reform its energy sector to create companies that rival multinationals such as Shell Group and BP. The United States is looking for a new, reliable source of oil that is not subject to the Middle East's turmoil. For its part, Russia has indicated it would like nothing more than to begin regular shipments of its oil to the United States, but it lacks the ability to do so on a large scale. "This is a historic opportunity because at the highest levels of government, you have a political alliance and friendship that has been clearly and publicly delineated," said Amy Jaffe, energy policy analyst at Rice University's James A. Baker II Institute for Public Policy. "Now the question is, how do we translate that friendship into the commercial sphere?"

Russian oil exports have steadily risen since 1993, when they bottomed out at 3.2 mm bpd. They are projected to climb to just over 5 mm bpd by year's end, according to the Energy Information Administration, the research arm of the US Department of Energy. In comparison, the Saudis export about 7 mm bpd of oil. Many companies, including most of the US major oil concerns, got burned in Russia after the fall of the Berlin Wall, when the privatisation of the Russian oil industry was just beginning after decades of government control. Onerous taxes and murky contract laws sank deals that often appeared promising. That era seems to have passed. Evans noted that substantial US capital is already moving into Russia on ventures such as the Caspian Sea Pipeline Project, a crude oil line that will move Caspian Sea oil to the west, and Sakhalin Island, off Russia's eastern shore, where US companies want to drill. "There are other fields that I know a lot of American companies have interest in, but there needs to be a little more certainty as to what the tax structure will be for companies to invest in those fields," Evans said. "We can encourage this development in Russia. They have made great progress in improving the climate, and this will be a chance to highlight that."

The Russian oil industry has learned what it takes to attract Western money. "The Russian companies increasingly understand that their best potential for future capital is to be publicly traded, and that is pushing them toward more standardized business practices and transparency, all of the things they need when they go on the road to New York or London," Jaffe said. Long-time observers in Russia are hopeful about the changes but warn that US companies can never expect to do business strictly on their own terms. "If there is one thing you can say about investing in Russia, you never know as much about the other side as you want to know," said Toby Gati, a senior international adviser to the law firm of Akin, Gump, Strauss, Hauer & Feld. "There are things in Russia that have to change, things that will change slowly and things that will never change."

What sets this meeting apart is that it will be the first time the two countries' oil leaders meet on relatively equal footing. Its oil has given Russia new leverage in the international economy, even to the point where it challenged the power of OPEC when the cartel insisted it remove production, although that confrontation was short-lived. Russia may be warming up more to Western companies, or more specifically Western dollars, but there continues to be resistance to permitting Western companies unfettered access to Russian oil and gas reserves. There is a long-running disagreement over the kinds of deals for oil and gas exploration that the Russians wantto make, as opposed to those sought by Western companies. Western companies would like to strike production-sharing agreements, under which they are guaranteed larger profits and a certain share of a field's production. The Russians, however, favour a joint-venture arrangement where any outside company would have to share profits with a Russian company, which is a more complicated relationship.

There are hundreds of proposed production-sharing agreements collecting dust at the Duma, Russia's legislative body. Proposed legislation to streamline the process of issuing production-sharing agreements has also been sidelined. Historically, Russians viewed deals with Western companies as a zero-sum game: If they were not getting the upper hand, they felt they had been short-changed. That stance has softened, Gati said. "The win-win concept is relatively new to Russia," Gati said. The strategy Russian and Western oil companies are pursuing has drawn its share of criticism, especially from environmentalists, but economic and political observers generally support closer ties between the former enemies. Still, not everyone is celebrating this new friendship. Environmentalists warn that the Russian oil industry is an ecological disaster, and Western companies are eager to profit from the lax standards and correct those long-standing problems. "This energy summit is creating an unholy alliance between Russia's worst oligarchs and polluters and multinational oil companies that are racing around the world in search of countries with low environmental standards," said David Gordon, associate director of the non-profit environmental group Pacific Environment.

Source: Houston Chronicle - Knigt Ridder/Tribune Business News /p>

Joint Session of the Russian-Turkish and Turkish-Russian Business Councils

On January 12 a joint session of the Russian-Turkish and Turkish-Russian Business Councils took place at the Congress Centre of the Russian CCI. Taking part in the session were Evgeni Primakov, RF CCI President, Turkey’s Prime-Minister R.Tayyip Erdogan, Rifat Hisargiklyoglu, President of the Union of Trade, Industrial and Marine chambers and exchanges, Viktor Khristenko, RF Industry and Power Minister, Georgi Petrov, RF CCI Vice-President, Turkey’s State Minister Kyurshat Tyuzmen, Aleksandr Lebedev, Chairman of the Russian-Turkish Business Council, Turgut Gyur, Chairman of the Turkish-Russian Business Council and others.

By way of introduction Evgeni Primakov greeted all the participants of the session at the premises of Russia’s CCI. “It gives me special satisfaction to say that very important delegations of Russian and Turkish entrepreneurs are attending this first joint session,”- he said- “because trade and economic relations are a kind of a locomotive that is taking forward the train of our good-neighbourly relations with Turkey.“

Evgeni Primakov assessed the dynamics of development of Russia’s and Turkish trade and economic relations as positive. If mutual trade turnover in 1990 amounted to $1.5bln, by 2004 it amounted to $11bln, and prospects were good enough for increasing it to $15bln.

According to Primakov, the leaders of both states outlined horizons of development of political and economic relations between Russia and Turkey were at their December 2004 summit.

Evgeni Primakov then said that fuel and energy carriers amounted to 65 per cent to 70 per cent of Russian exports to Turkey, and thus one of the top priorities of the Chambers of commerce and industry for Russia and Turkey was changing the structure of trade turnover. Both sides are interested in the development of science-intensive manufacturing.

He also called intensification of inter-regional contacts one of the priorities of cooperation. He stressed that Russia is wider than Moscow and the Moscow region. Russia’s CCI has a membership of 168 territorial chambers in Russia’s different regions and municipalities.

- Economic rapprochement is linked to the growth of trust at the state level. President Putin has cited our relations with Turkey as an example, and there are all reasons for that,”- Evgeni Primakov said.

In his speech Turkey’s Prime-Minister R.Tayyip Erdogan stressed that the attention given to the Joint Council by politicians in both countries is evidence that they have joint will for development of bilateral relations.

- Our nations are getting closer, -Erdogan said. – “Russia is a friend to whom we pay especial attention, and our relationships are developing in the highest positive degree. During his visit to Turkey in December of 2004 President Putin indicated there was an opportunity of a transfer to a level of multilateral cooperation."

Turkey’s Prime Minister said that Russia is his country‘s second most important economic partner of Turkey. Relationships were developing dynamically over the past several years, but to secure further development they need to have mutual investment and creation of an infrastructure, including the activities of Business Councils that are to further economic and trade relationships between the two countries and supply of relevant information. Especial significance in the activities of Business Councils is given to strengthening of ties and cooperation between small- and medium-sized Russian and Turkish companies.

Viktor Khristenko, Russia’s Industry and Power Minister in his capacity as the chairman of the Russian chapter of the Intergovernmental Commission said that meetings of Russian and Turkish partners have become regular, with the level of contacts and their intensity reaching its apex. In his view that was very precious because nothing can be earned for as long and lost as fast as trust. He stressed the hugeness of dynamics and the large scale of relations between the two countries.

Turkish Prime-Minister said that Russia was his country’s second biggest economic partner. Relationships were developing dynamically over the past several years, but to further their development its would take mutual investments and creation of an infrastructure, including Business Councils that are to promote economic and trade relations between the two countries and ensure supply of the relevant information. Strengthening ties and cooperation of medium-a and small-sized businesses is being given an especial attention. Viktor Khristenko also named natural gas and petroleum-producing industries as well as electrical power production as priority directions of cooperation. Each of those, he said had a base for long-term cooperation in both developing the extraction directions and processing and science-intensive areas and investments.

He then outlined in details the issues of balancing trade and economic relations speaking about the need to liquidate red tape and reduce the burden on business, ridding of discrimination. The Russian-Turkish Business Council plays an enormous role in that he said, generating success and voicing problems.

Turkey’s State Minister, Chairman of the Turkish leg of the Intergovernmental Commission Kyurshat Tyuzmen said that further productive activities required creation of consulting mechanisms, more frequent meetings and faster problem solving measures. To have these there was everything – experience, know-how and the many-century –old history of Russia-Turkey relations.

Rifat Hisargiklyoglu, President of the Union of Trade, Industrial and Marine Chambers and Exchanges said that relations with Russia have especial significance for Turkey and that there was the wish to develop them further, given that there are no political differences between the two countries. The Joint Business Council plans to continue its work exactly in this direction.

Aleksandr Lebedev, Chairman of the Russian-Turkish Business Council said that his organization had been set up recently but it was set up to act. The joint declaration signed by Russia’s and Turkey’s presidents includes clauses on partnerships. To fill the official paper with real activities and strengthen trade and economic ties is what the Council should do.

Two documents were signed at the session – the Agreement on Cooperation between Russia’s CCI and Turkey’s Union of trade, industrial and marine chambers and exchanges, and the Protocol on Cooperation between the Russian-Turkish and the Turkish-Russian Business Councils.

Russia’s CCI President Evgeni Primakov and President of Turkey’s Trade, Industrial and Marine Chambers and Exchanges Rifat Hisargiklyoglu signed the agreement on cooperation.

Source: http://eng.tpprf.ru /p>

Shougang Group Reports Profits of US$150 Million

Shougang Group Corporation, one of China's leading steel products maker, announced Thursday that it has earn a record 1.25 billion yuan (about US$150 million) after taxes last year, up 21.6 percent on a year-on-year basis.

The corporation did 61.9 billion yuan (US$7.46 billion) in sales in the past year, a rise of 39.9 percent from that of 2003.

A corporate executive ascribed the company's achievement to its substantial efforts in producing more high-tech steel products, adjusting production capacity mix, revamping the administration and laying off surplus workforce.

In 2004 alone, Shougang Group Corp., with the headquarters in western Beijing, used 1.3 billion yuan (US$157 million) on scientific and technological upgrading programs. High-tech rolled steel with high added value made up 55.7 percent of the corporation's total output in 2004 or showed a rise of 42.2 percent from the previous year. /p>

Hurray! Plans Listing on NASDAQ

Chinese mobile messaging service provider Hurray! Holdings Co Ltd planned to float its shares on the NASDAQ stock market, amid an industrial slowdown and structural changes.

Hurray! made a filing to the US Securities and Exchange Commission on Wednesday (US Eastern Time), indicating that it aims to sell 6.88 million American depository shares (ADSs) on the high-tech NASDAQ and is expected to raise as much as US$79.81 million from the initial public offering.

The company will become the seventh NASDAQ-listed Chinese company. It is focused on mobile value-added service business.

The flotation is priced between US$9.6 to US$11.6 and the exact date of the offering was not provided.

CitiGroup is leading the effort with assistance from Piper Jaffray and ThinkEquity Partners LLC.

The underwriters also have an option to sell another 1.032 million shares.

A spokesperson for Hurray! said her company is working on the listing and some executives are already out on a road show, but she declined to give more information.

Hurray!'s offering comes at a difficult time for mobile value-added service providers, who have faced an industry slowdown.

Zhou Yi, an analyst with the Beijing-based market research firm Analysys, predicted that the market will see growth of less than 30 percent this year.

Analysys said the market grew to 30 billion yuan (US$3.6 billion) in 2004, increasing by 60 percent, a record low since 2001.

The slowdown comes after a regulatory campaign from the Chinese Government on stopping the spread of illegal and pornographic content through mobile phones.

Beijing-based Mtone, one of several hot NASDAQ-listing candidates last year, was punished by China Mobile for sending "unhealthy content" and its multimedia messaging service was suspended for a year in September.

The company had to scrap its flotation plans due to the punishment.

The country's two dominant mobile operators, China Mobile and China Unicom, also started to stop service providers from charging subscribers without their consent.

The move also led to a sharp decrease in providers' revenues from mobile messages, especially text messages.

However, Jim Sun, an Internet and telecom analyst with Shanghai-based Evolution Securities believes that Hurray!'s offering might be attractive.

Hurray! is the biggest service provider on the network of China Unicom, a minor mobile operator, and the environment of the value-added service business on its network is much cleaner and less impacted by regulatory campaigns. That means Hurray!'s business may have better ability to offset policy changes, he said.

Another attractive point of Hurray! is that its business is mainly focused on wireless application protocol or WAP, which allows mobile phone users to download ring tones, pictures through a mobile network, or surf the mobile Internet.

Evolutions Securities' statistics show Hurray! was the second biggest WAP operator in China in September with 14 percent of market share, after NASDAQ-listed, Kongzhong Corp.

Sun said the WAP market jumped sharply last year to US$140 million from US$24 million in 2003, and is forecast to grow to US$250 million this year. /p>

Overseas Firms Move on Group Insurance Market

Foreign insurers are making rapid headway in China's lucrative group insurance market, displaying strong competitiveness in this newly opened sector.

Days after it clinched regulatory approval to broaden its business scope, Sino-British insurer AVIVA-COFCO Life Insurance Co wrote its first group insurance policies on Wednesday, which it said were the first among foreign or Sino-foreign life insurers operating in China.

Pacific Antai Life Insurance Co Ltd and Nissay-SVA Life Insurance Co Ltd are reportedly also among the first batch of several foreign insurers that were approved to sell group life insurance.

Honouring pledges it made upon joining the World Trade Organization in 2002, China lifted all geographical and business scope restrictions on foreign insurers in December, opening key businesses such as group insurance, health insurance and annuities.

"We really take pride in having taken the nation's first group contracts by foreign insurers," said AVIVA-COFCO President Eric Chang.

The insurer sold its first three group insurance policies to China National Cereals, oils & Foodstuffs Import & Export Corp (COFCO), its Chinese shareholder, Baijia Food Co Ltd and Guowang Technology Co Ltd.

AVIVA-COFCO is a 50-50 joint venture between British insurance giant Aviva Plc and the State-owned COFCO, a leading foodstuffs trader. It was established in January 2003 in Guangzhou, capital of south China's Guangdong Province.

It set up two branches last year in Beijing and Chengdu, capital of Southwest China's Sichuan Province.

There are currently 18 Sino-foreign insurance joint ventures like AVIVA-COFCO operating in China. By mostly partnering with leading local companies, these foreign insurers have gained a major foothold in the lucrative group insurance market, analysts say.

Such a model is likely to prove a powerful weapon for joint venture insurers in China's group insurance market, and may greatly change the market's landscape in a couple of years, they say.

Qu Juwu, the human resources director of AS-SC Investment Management Co Ltd, which owns Baijia Food, said it had quit a Chinese insurer for the better services provided by AVIVA-COFCO. /p>

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