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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>

Russian oligarch saves erstwhile popular Italian company - 08/10/2005 15:12

Benelli became the second luxurious acquisition of a young Russian businessman

Employees of the previously popular Italian company, a maker of expensive sports motorcycles may hope now that their company will have a bright future. A man of the Russian origin promised to help Benelli extricate from the crisis and retrieve its popularity in the world. The person's name is Nikolai Smolensky: the 25-year-old man is the son of a well-known Russian banker, Alexander Smolensky. The price of the transaction has not been exposed to the public yet.

The businessman's plans to expand his automotive property surfaced last week, when it was decided to clear up some space for Benelli products on the territory of the TVR sports car maker, which Nikolai Smolensky acquired not too long ago. For the time being, it is not known how exactly the young businessman intends to use the space, whether it is going to be a warehouse, an office or a workshop. Autoblog magazine wrote that Mr. Smolensky intends to organize the spare parts production on TVR's territory. In addition, the magazine believes, it is not clear, who initiated the purchase, whether it was Nikolai Smolensky, or the TVR administration.

PistonHeads magazine wrote with reference to its sources in the TVR that the acquisition of the motorcycle-making company originally sprang from Nikolai Smolensky himself. “Nick was happy to buy it. That is why they prepared some space to organize Benelli's production on the factory,” a source that wished to remain anonymous told the magazine.

Founded in 1911 by Benelli brothers, the company reached the peak of its popularity in the 1970s. Benelli's motorcycles used to be as valuable and prestigious as modern BMW or Ducati bikes. The previous owner of the company, the Merloni family, never succeeded to retrieved Benelli's erstwhile popularity. Currently, Benelli suffers a serious financial crisis, and so does the British TVR, which Nikolai Smolensky ventured to revive a year ago.

Pravda.Ru/p>

Ukraine steals gas from Russia and sells it to the West - 07/19/2005 12:13

The Yushchenko team is holding Ukraine's population hostage for carrying out its audacious experiments

Russia and Ukraine is no longer in conflict over 7.8 billion cubic meters of natural gas that Ukraine “ripped off” from Russia, as Russian President Putin put it. Ukrainians will be paying for all the losses at a price that is close to the market one. Besides, Ukraine will have to buy gas from other suppliers to keep its economy running. The sale price will be mostly on an arm's length basis too.

Paying the price for their own mistakes seems to be something unfair and inappropriate to the new Ukrainian authorities. Therefore, the Ukrainian consumer will have to pay. A hike in gas and electricity prices has been approved, the tariff change date to be announced sooner or later.

The plans of the Ukrainian government to increase gas and electricity prices came to light even before the latest gas dispute between Russia and Ukraine broke out. A similar controversy over natural gas arose between Tukmenistan and Ukraine shortly before it.

The story of the stolen gas

The gas problem became an item on the agenda of the bilateral relations way before the dispute arose over the Russian gas stored in Ukraine's gas underground storage tanks (USTs). It is Ukraine that set the ball in motion trying to revise the relations in the gas sector. Back in March this year, during the talks with Gazprom, Ukraine came up with a proposal by offering to switch from the barter terms of deal to cash payments for gas supplies and transit fees. As a result, Gazrom responded to the offer of the Ukrainian government and decided to make its own revision of the gas relations between the two countries. After all, transparency is transparency.

Late March Gazprom CEO Alexei Miller advised the Ukrainian President Viktor Yushchenko that the Russian gas reserves stored in the Ukrainian USTs might be used for increasing the amount of gas to be delivered to West European countries at the peak of consumer demand. At least such a possibility was considered by Gazpom. From last year's late October up to March this year the Russian side forwarded 40 requests to Ukraine as to gas in stock in the USFs. No answer came from Kiev. Apparently, Mr. Yushchenko did not see the issue worthy of his attention and therefore no instructions were given to clarify the situation. When the Russian side raised the issue yet another time in June, the Ukrainian side kept silence for a while. Then the Ukrainians began furnishing “conflicting testimonies.”

Within a few days they put forth several mutually exclusive versions of the situation while the Russians were already smelling a rat.

The main versions are as follows:

Natural gas is fully available yet can not be returned to Russia due to technical (technological) reasons. In other words, the full volume of Russian gas is in stock in the USTs but it can be pumped back to Russia only if squeezed out by additional gas. Therefore, Russia should supply new gas to Ukraine to squeeze out the old one. The above are the most plausible reasons often cited by the Ukrainian authorities.

The new authorities also put the blame on their predecessors. Blaming the has-beens is the most surefire version of the story for Kiev to stick to in terms of politics. But only unofficial sources cite it as an explanation while the official ones vaguely hint at the possibility of such a scenario. For example, energy company Naftogaz Ukrainy CEO Alexei Ivchenko made a statement on July 1st about gas that was allegedly in stock in Ukranian USTs. He also said that his company was pumping enough gas to the underground storage tanks. In the same statement he claimed that around 150 million of cubic meters of natural gas had been found in stock in the USTs when he had taken over the company. The figures are in contradiction to 8 billion bcm of gas reportedly signed for by the old management, said he. “As of today, we have practically resolved the problem and now we are pumping the gas storages with respective amount of gas,” said Mr. Ivchenko. He also said that a contract for the additional purchase of gas was in the works. He was confident the Ukrainians would be able to resolve the gas dispute with the Russians within a year citing the latest success of the Ukrainian government which managed to resolve the dispute with Turkmenistan over the gas sales to Ukraine, Podrobnosti reports citing Ukrainski Noviny.

The former head of Naftogaz Ukrainy Igor Boiko strongly objects to the above viewpoint, according to his yesterday's interview in the newspaper Zerkalo Nedeli.

Among other things, Mr. Boiko commented on the situation around the gas dispute with Turkmenistan. “The point is that no goods whatsoever have been set off as payment for Turkmen gas delivered to Ukraine since the start of the year, and no offset ratio has been agreed upon so far,” said Mr. Boiko. He claimed that Turkmenistan had officially warned Naftogas Ukrainy of a potential debt ranging from $400 million to $500 million that the Ukrainian side would run up should it fail to deliver goods for payment within three weeks, and the Turkmen side will consequently transfer the commodity sum of the debt into cash. Mr. Boiko said that when he was at the helm the company made every effort to pay back the Ukrainian debt incurred in the 1990s so that Turkmenistan might have no reason for blackmailing Naftogaz Ukrainy with the debt amassed. According to Mr. Boiko, the Turkmen side will definitely charge late payment fee and interest up to the complete debt redemption date should the debt agreement come into being. Mr. Boiko believes Turkmenistan will also demand a hike in price for natural gas it sells to Ukraine. On the level, the Ukrainians have no achievements to be proud of in this case. Perhaps Alexei Ivchenko has different evaluation criteria for failure and success.

Ukraine sold natural gas to the West at a European price. According to Dmitry Kulikov, expert of the State Duma Committee for Relations with Compatriots, Ukraine most probably used up the reserves of gas in the USTs to the max. He believes the remainder of gas formally labeled as the Russian stock can not be pumped out of the storage tanks without the risk of causing damage to normal operation of the storage facilities. In other words, Ukraine used up its own natural gas (it was sold and the money was wired to respective accounts) while maintaining the safety of its USTs with the help of Russian gas. Mr. Kulikov is confident that one of the re-export schemes can be clearly seen in Mr. Ivchenko's interviews. According to Mr. Kulikov, Mr. Ivchenko openly disclosed the business scheme used for Russian gas dealings. Mr. Ivchenko is opposed to the ban on gas re-export because it is the most viable part of the Naftagaz operations with profitability reaching up to 100% and above. It is a very smart move when you sell gas to Europe for 100% and pay back to Russia at a 50% basis some time later. That is the method used repeatedly by Ukraine when it took more Russian gas out of the pipeline than the contract stipulated. Subsequently, Ukraine produced debt agreements with a grace period based on a $50 price. In the meantime, Ukraine was selling gas to the West at a double price with immediate cash settlement.

Gazprom management opted to skip the bunch of “murky” patterns. Instead, Gazprom made a truly Solomonic decision and agreed to transfer the amount of reported gas to Nafrtogaz as part of Gazprom's 2005 transit fee payments regardless of actual availability of gas in the USTs.

Should the gas is really available in its storage tanks, Ukraine is free to use it for domestic consumers or sell it to Western Europe.

Kiev's reaction can indicate that even if the Russian gas was stored in full volume in the USTs some time ago, say six months ago, it can not be extracted anyway. Hence a breach of the contract. If a shortfall took place some time ago yet the reserves were replenished as of today, the gas in the USTs is still unavailable at the moment and can not be used even for domestic purposes. But the situation is of no concern to Gazprom, it is Ukraine's internal matter. Judging by the statement of the Ukrainian Prime Minister Yulia Tymoshenko made earlier this June, the gas can not be extracted from the storage facilities. She said that gas exports might be put on hold due to reported lack of gas for domestic needs amounting to 8 bcm in the year 2005.

In the same statement Mrs. Tymoshenko said that Naftagaz Ukrainy assured the government that contracts for the purchase of additional 8 bcm of gas would be signed until July 1st. The new contracts should enable the Ukrainian government to continue the gas export operations estimated at 5 bcm, reported Interfax-Ukraine at the end of June. As far as we know, no contracts were signed until July the 1st.

In light of the above developments, President Putin of Russia made a statement which the Ukrainians took as an insult. Speaking to the journalists, President Putin said: “We are planning to expand our cooperation with Ukrainians if they do not rip off our gas.” Mr. Putin also said that Russia intended to strengthen cooperation with Belarus and Poland with regard to the development of gas transit routes. “We are holding talks now with Norway, it has a good pipeline network which will be running out of gas in some ten years, Norway seems to be a very convenient partner to us for that matter,” added Mr. Putin. It is noteworthy that President Putin voiced his position on the issue only after the Ukrainians said that the Russian company's export operations could be at risk due to the decision on the setoff taken by Gazprom. In other words, Kiev hinted that it would take as much gas as needed from the pipeline network, and the remainder would make it to Europe. The Ukrainian authorities threatened to take action even though they just bluffed. Therefore, both the wording and the main point of President Putin's statement are quite adequate.

The one who foots the bill

The gas dispute between Russia and Ukraine came to an end last Sunday. The new Ukrainian authorities will be tackling all the problems related to natural gas that Gazprom said had gone missing.

Gazprom and Naftogaz Ukrainy said Sunday they had resolved a dispute over 7.8 billion of cubic meters of Russian natural gas stored in Ukrainian underground storage tanks. Part of the gas amounting to 2.55 bcm will be transferred to Naftagaz as part of Gazprom's transit fee payments. Gazprom agreed to sell the remaining amount to Rosukrnergo, a joint venture between Austria's Reiffeisen Investment and Russia's Gazprombank. Rosukrenergo is an operator of Turkmen gas supplies to Ukraine. According to the contract, Naftagas Ukrainy will supply gas to Rosukrenergo. And Gazprom will receive $800 million under the deal (around $150-$160 per 1,000 cubic meters).

Besides, Naftogaz will have to fill the gap at the domestic market. The Ukrainians cut a deal with a Russian independent trader ZAO Transnafta regarding the supply of 6 bcm. Rusukrenergo will supply Ukraine with another 5 bcm after receiving the “missing gas” from them.

The Ukrainian authorities will undoubtedly find a scapegoat to be held responsible for the shady dealings involving the Russian natural gas. The present management of Naftagaz is likely to take some heat. However, the “team of honest professionals” will get away with the monkey business. It is the Ukrainian economy that will have to pay the full price. Metallurgy and chemical industry, consumers of public utilities i.e. all Ukrainians will have to pay the price.

No matter how complicated and unclear the settlement patterns were under the “old regime,” all of them boil down to soft payment terms applicable to Ukraine. The transit fee payments across Ukraine and the price of Russian natural gas made no difference since Gazprom used a non-cash payment system. Increasing nominal price for the Gazprom gas by three times can be compensated by a 4-5 time hike in transit fees to reach the previous amount. For every action there is an equal and opposite reaction. So Russia would have the right to charge Turkmenistan the same transit fees for pumping Turkmen gas though the Russian pipelines to Ukraine as the latter does with regard to the Gazprom gas flowing to the West though the Ukrainian pipelines. And why should not Turkmenbashi increase his natural gas prices up to East European level? The price of gas both for the industrial companies and public utilities will rise in any case. Taking into the account the above, we would say that the Yushchenko team is holding Ukraine's population hostage for carrying out its audacious experiments.

Alexei Kovalev

Pravda.Ru/p>

Russia loses struggle in the competition for the ruined British car maker, MG Rover - 07/26/2005 16:16

The miracle did not occur: an offer from the Chinese corporation proved to be a lot more profitable and more perspective

The erstwhile symbol of the British car industry, the last British car maker, which is not owned by foreign companies, MG Rover, was sold to the China's Nanjing Automobile Corp. The information about the deal was announced by the auditing company PriceWaterhouseCoopers, which conducts the external management of MG Rover's assets.

Nanjing Automobile Corp. won the deal in the competition with both Russian businessmen that were interested in the British automobile concern and another Chinese enterprise, Shanghai Automotive Corporation.

The new owner intends to move a part of MG Rover's production capacities to China. Vehicles of the Chinese assembly will be delivered to EU and British markets. Analysts believe that the reduction of the production prime cost will let MG Rover retrieve a certain part of its previous market positions during the forthcoming several years.

MG Rover was trying to solve its financial problems for almost ten years before the enterprise announced bankruptcy in April of the current year. BMW owned the concern before 2000, although the German car giant failed to extricate the British car maker from the crisis: BMW intended to shut down the production in Great Britain. The social pressure made the German enterprise decline plans to optimize MG Rover's business: BMW sold the industry to the British company Phoenix Venture Holdings for only ten pounds sterling. The latter represented the interests of four Birmingham-based businessmen – John Towers, John Edwards, Peter Beale and Nick Stephenson. Phoenix invested about 500 million pounds sterling in the production, but eventually failed to save MG Rover. After that, Phoenix decided to sell the enterprise to Chinese Shanghai Automotive Industrial Co. (SAIC). The deal implied investments of one billion pounds sterling ($1.8 billion). Negotiations did not end with a contract – bankruptcy became the only way out of the crisis.

British businessman David James and the Iranian company Dastaan Industrial Development also participated in the tender to acquire the ruined British car maker. It was rumored that Nikolai Smolesnky, the son of the Russian oligarch Alexander Smolensky, was also interested in MG Rover. Shanghai Automotive Corporation was considered the likeliest winner of the contest, though. British media outlets were especially interested in the opportunity for a Russian citizen to acquire their automotive company. It was particularly revealed as a result of numerous opinion polls that the majority of British people had nothing against the Russian management in MG Rover.

The miracle did not occur: an offer from the Chinese corporation proved to be a lot more profitable and perspective to MG Rover, specialists of PriceWaterhouseCoopers believe.

Some analysts say, however, that it was a rather risky acquisition to make. Shanghai Automotive previously purchased rights to sell Rover 25 and Rover 75 models, which means that the new owner of the British enterprise may face legal problems to sell its products. In addition, the Honda enterprise, which owns rights for several MG Rover's production technologies, withdrew its equipment and designs from the British car maker. Honda's action may complicate the production of Rover-45 model, which was based on Honda Civik; the same may happen to the MG ZS model. In spite of certain difficulties, with which the Chinese company may encounter during the production recommencement, MG Rover's perspectives are estimated as quite optimistic if the basic production capacity of the enterprise is moved to China. MG Rover may cut the sale price on its cars owing to the prime cost reduction. Price will thus become the key competitive advantage of the joint Chinese and British production in addition to the production of new models. Analysts believe that MG Rover will succeed in occupying up to 20 percent of the British car market during the forthcoming two or three years and will finally return to the EU market.

Reference

MG Rover used to make such models as Rover 45 and 75, MG ZR, ZS, ZT, as well as hatchback ZT-T and roadster MG TF. The company employs some 6,000 people. The enterprise suffered J77 million of losses as of the end of 2003. The share of the British market, which MG Rover used to take, dropped from 40 percent in the 60s to three percent nowadays. The company made the last model of its vehicle in 1998. MG Rover failed to sell the entire batch of Rover-75 made in 2000.

Pravda.Ru/p>

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