F REIGN TRADE - 中国国际贸易促进委员会

FEB. 2013 No. 531 Sponsored by CCPIT Since 1956
CHINA’S
F REIGN TRADE
Special report
Booming
Consumption in
Chinese Spring
Festival
SURVEY
Chinese
Millionaires Stay
Hungry for French
Luxury Goods
Mr. Zhang Jianwei,
President and
Chief Country
Representative of
Bombardier China
国 内 邮 发 代 号 :80-799
国 际 邮 发 代 号 :SM1581
国 内 刊 号 :CN11-1020/F
国 际 刊 号 :ISSN0009-4498
http://www.ccpit.org

Policies
China approves science infrastructure plan
The State Council, or China’s cabinet, has approved a plan on infrastructure
construction for major science and technology projects for the next two decades,
Xinhua News Agency reported.
According to a statement released after an executive meeting of the State Council,
the Medium- and Long-Term (2012-2030) Plan on Infrastructure Construction
for China’s Major Science and Technology Projects aims to boost China’s innovation
capability, support major science and technology breakthroughs and accelerate
infrastructure construction for major projects.
The plan, focusing on cutting-edge research and the country’s major strategic
demands, highlights seven major fields, including energy, life, Earth systems and
environments, materials, particle and nuclear physics, space and astronomy and engineering
technology.
The plan gives priority to 16 projects, such as setting up a deep-sea scientific
observation network, as well as building high-precision gravity reading and research
devices, the statement said.
According to the meeting, which was chaired by Premier Wen Jiabao, more
efforts will be made to increase investment and create a system that enables coordinated
innovation and resource-sharing in order to boost the efficiency of major
infrastructure projects.
The State Council
also decided to make
amendments to two
regulations regarding
the enforcement of
Copyright Law and the
protection of the right
to information network
dissemination. Another
two regulations on the
protection of computer
software and new plant
species will also be
amended.
According to the statement, the decisions
were made to intensify a crackdown on intellectual
copyright infringement, as well as
combat the manufacturing and sale of counterfeit
products.
Reserves to support overseas
expansions
China’s foreign exchange regulator said a
new unit will use the nation’s $3.3 trillion in
reserves to support Chinese companies’ expansions
overseas, signaling fresh outlets for
the world’s largest currency stockpile, according
to China Daily.
The State Administration of Foreign Exchange
said on January 14 that its co-financing
office has been seeking an “innovative use” of
the reserves and “supporting financial institutions
in serving economic growth and their
going-out strategy”.
The Chinese government has been encouraging
companies to buy assets overseas
through a “going out” strategy to secure energy
and commodity resources, buy technology
and build internationally strong businesses.
“A larger portion of China’s reserves is
expected to be used to finance overseas investment
deals,” said Zhang Zhiwei, chief China
economist at Nomura Holdings Inc in Hong
Kong.
“Given the large size of China’s reserves,
a small percentage change will mean a big
amount,” Zhang added.
Zhang said only a small part of China’s
Figures
6.2%
Growth of China’s foreign
trade missed the government’s 10-
percent annual target set for 2012
by rising only 6.2 percent from
2011, the Customs data showed.
5.5%
China’s power consumption
expanded 5.5 percent year on
year in 2012 to
4.96 trillion kilowatt
hours, the
National Energy
Administration
said.
$168.96
Trade between
the Chinese
mainland
and Taiwan expanded 5.6 percent
year-on-year in 2012 to $168.96
billion, the General Administration
of Customs said.
7.8%
China’s economic expansion
slowed to 7.8 percent year on year in
2012 amid external jitters and domestic
woes, data from the National Bureau of
Statistics (NBS) showed.
2

Quotes
reserves are expected to be used by the
new office.
The foreign exchange administration
said its co-financing office will
respect “market choice” and promote
“fair play”, according to a statement on
its website.
The operations have “promoted
China’s economic and social development,
expanded the scope of investment
and the fields of foreign exchange reserves
and promoted a diversified management
approach,” said the agency.
China to cut farm produce
distribution costs
The State Council, China’s cabinet,
recently issued a circular asking local authorities
to ensure the implementation of a
range of measures aimed at cutting logistics
costs for farm produce amid climbing
food prices, according to Xinhua.
The measures include lowering
electricity and water usage fees for
those engaged in the production and
distribution of farm produce, cutting administrative
fees at markets, facilitating
the transportation of farm produce and
reducing taxes on major products.
The recent policy came amid rising
farm produce prices in China. The new
pricing systems for electricity and water
usage should be implemented before
June 30 this year, the circular said.
“China’s foreign trade to improve this year”
China’s foreign trade
for 2013 will be better
than that of last year
despite uncertainties,
General Administration
of Customs spokesman
Zheng Yuesheng was
cited as saying by Xinhua
on January 10.
He said global economies
have launched stimulus
policies to prevent
growth rates from slumping,
adding that China’s domestic efforts to boost the growth of foreign trade
will have more visible effects this year.
“U.S. should not blame trade deficit on China’s
currency policy”
The so-called Chinese “currency manipulation” is some Americans’
favorite scapegoat for the United States’ large trade deficit and anemic job
growth, but export growth is actually determined primarily by factors other
than exchange rates, Edward Lazear, former chairman of the U.S. President’s
Council of Economic Advisers, was quoted as saying by Xinhua.
When things are not going well, it is common to seek scapegoats. In this
vein, populists of various stripes allege that China manipulates the value of its
currency to favor its exports and undercut American workers, particularly in
manufacturing, noted Lazear.
“The reality is that the value of China’s yuan in terms of dollars is not the
major reason why China exports over three times as much to us as we do to
them. Its exchange rate is a minor source of weak U.S. job growth,” Lazear
wrote in an article on The Wall Street Journal.
10%
China’s industrial
value-added
output rose 10 percent
year on year
in 2012, down 3.9
percentage points
from the growth
rate a year earlier,
the NBS said.
6.8%
China, the world’s second-largest
oil consumer, imported
271 million tonnes of
crude oil last year, a rise of
6.8 percent year on year.
3.7%
Foreign direct investment
in China in 2012 declined 3.7
percent year-on-year to $111.72
billion, the Ministry of Commerce
said.
11.2%
China collected 11.07 trillion
yuan ($1.76 trillion) in
taxation last year, an increase
of 11.2 percent year on year, the
State Administration of Taxation
data showed.
3

Policies
PBOC to continue “prudent” policies
China’s central bank reiterated its “prudent” monetary stance for 2013 while
pledging to strengthen financial reform and avoid risks amid rising inflationary
pressures, China Daily reported.
The central bank will maintain consistency and stability in its policies, while
helping credit supply and total social financing grow steadily, the People’s Bank of
China said in a statement published on its official website.
The statement was released at the end of the central bank’s annual work conference,
which set the policy tone for 2013.
The PBOC’s focus this year will also be on containing financial risks and promoting
reform of the financial system.
“We will strengthen monitoring over financial risks and firmly hold the bottom
line of no systemic and regional risks,” the PBOC said in the statement, adding that
it will enhance supervision over non-financial institutions of funding capability, and
accelerate establishment of a deposit insurance system.
But analysts said that as the central bank set lower-than-expected growth targets
for monetary supply while more investment projects need capital backup this
year, the unavoidable rising dependence on non-bank financing, such as trust loans
and bond sales, might pose greater risks for the economy.
plan says.
The government is targeting an annual
production value of 150 billion yuan ($23.8 billion)
by 2015 for the biofuel sector, according
to the plan.
The sector’s overall output has risen at an
annual average of more than 20 percent since
2006, reaching 2 trillion yuan in 2011, according
to the plan.
The sector is one of seven emerging industries
that the government is aiming to promote
over the next few years in order to turn domestic
consumption and technological innovation
into driving forces for the economy.
China to boost biotech industry
The Chinese government will give a boost to the biotechnology industry in
order to tackle problems related to population growth, food safety, energy conservation
and environmental protection, the State Council was quoted as saying by Xinhua.
The government aims to double the share of GDP that the sector’s value-added
output accounts for by 2015 from the 2010 level, according to a biotech industry development
plan unveiled by the State Council, or China’s cabinet.
The sector will see its output surge at an average annual rate of more than 20
percent from2013 to 2015, according to the plan.
The government also plans to improve the sector’s innovation and technological
prowess to make it a pillar industry by 2020.
New medicines, crops, biofuels and environmental technology are needed to
protect the health of an aging population, ensure food safety and save energy, the
Figures
650 bln
The Chinese government
plans to invest 650 billion
yuan ($103.56 billion)
in railway construction this
year, nearly equivalent to
the amount spent last year.
8.2 trln
China’s new yuan-denominated
lending reached
8.2 trillion yuan
($1.3 trillion) in
2012, up 732 billion
yuan year on
year, the central
bank announced.
2.5%
China’s consumer price index
(CPI), a main gauge of inflation,
grew 2.5 percent year on year in
December, the fastest pace since
June, NBS announced.
6.2%
The number of sale and purchase
agreements for all Hong
Kong building units for 2012 was
115,533, up 6.2 percent over a year
earlier, the city’s Land Registry
announced.
4

Quotes
Regulator vows to take
hard look at IPO applicants
China’s top securities regulator announced
that it will step up its review
of the 2012 annual financial reports of
companies seeking an initial public offering,
focusing on risk disclosure and
operational performance evaluation,
China Daily reported.
The examination process will include
self-inspections by intermediaries
such as securities companies and accounting
firms, reviews by the China
Securities Regulatory Commission, or
the CSRC, and spot checks to expose
fabricated deals and false business income,
the commission said.
“There will be no exceptions, and
any violation will have consequences,”
CSRC Vice-Chairman Yao Gang said.
He said businesses that have applied
for IPOs should make sure that the application
materials are real, accurate and
complete.
A sponsoring institution should
withdraw its application if the enterprise’s
situation is not up to IPO standards,
Yao said.
The self-examination reports should
be submitted before March 31. The
CSRC will launch 15 special working
groups to randomly choose 20 to 50
businesses from the IPO waiting list for
the spot-checking procedure, the commission
said.
“Dec exports surge was normal”
Responding to skepticism about China’s exports surge in December,
Commerce Ministry spokesman Shen Danyang said during a news
briefing that it is normal to see exports fluctuate for some months, China
Daily reported.
He added that there is no reason to say that the December exports
figure was fabricated.
The expiration of some measures at the end of December was also
responsible for the hike, Shen said. The exemption of statutory inspection
and quarantine fees expired on December 31, 2012, which boosted
exports in December.
“China’s H2 GDP growth to quicken”
Deustche Bank (DB) forecast that the annual growth of China’s gross
domestic product (GDP) will quicken to 8.5 percent in the second half of
2013, boosted by improving corporate earnings and increasing government
spending, Xinhua reported.
Ma Jun, chief economist of DB China, voiced expectation that China’s
GDP growth will accelerate to 8 percent in the first six months and
further pick up to 8.5 percent in the second half of the year.
“China now 3rd most innovative country”
General Electric recently unveils the results of its “2013 Global Innovation
Barometer,” with China moving up to the third most innovative
country, surpassing Japan for the first time.
The report summarized that China’s environment is conducive to
innovation. Flexible and diversified business models, strong government
support, talent strategy without a certain pattern and openness to international
collaboration are four advantages of China’s successful innovation.
45 mln
45 million illegal publications
were confiscated and over 3.7 mill
i o n p i e c e s
o f o n l i n e
information
involving
pornography
or other illegal
content
were deleted
in China in 2012.
116
Chinese postal
authorities said the
permits of 116 express
delivery companies
were canceled in 2012
and urged greater supervision
amid a series
of reports on problems
with the booming sector.
$16.6 bln
The preliminary estimate of
the Macao Special Administrative
Region’s foreign exchange reserves
amounted to 132.5 billion patacas
($16.6 billion) at the end of December
2012, according to figures released
by the Monetary Authority of
Macao.
5

http://cft.ccpit.org
www.ccpit-cft.net.cn
2013/02 No.531
08
42
Spring Festival is when the majorities of
Chinese at home and abroad return to
their hometowns and spend the holiday
with their relatives.
Although most of the elderly in
China usually live a thrifty life,
they tend to splurge on health
products.
Special report
08 Booming Consumption in Chinese Spring Festival
09 Food Prices Saw Sharp Rise
11 Hot Booking of New Year Eve Dinner
12 Eco-fireworks Light the Snake Year Spring Festival
14 Watch Out for Fishing Websites While Shopping Online
15 Supermarkets, Malls Scramble to Woo Consumers
16 Have You Bought Train Tickets?
18 Chinese Outbound Travel Soaring
19 Gold Still Popular with Chinese Investors
20 The Impact of Holidays on China-EU Trade
ECONOMY
23 Higher, Broader, Deeper
26 When Exchange-rate Volatility Affects Trade
28 Data Watch on China’s Foreign Trade and Investment in 2012
48
Chinese millionaires stay hungry for
French luxury goods.
Industrial Watch
32 China’s Grain Imports at a Record High
39 More Choices for Online Consumers in China
40 The Future of Connected Cars
42 Why Elderly Tend to Splurge on Health Product?
44 Electronic Tech Trends for 2013
survey
48 Chinese Millionaires Stay Hungry for French Luxury Goods
52 Global Automakers Target at Chinese Market
88
Located in the northern tip of Henan
Province on the Beijing-Guangzhou
Railway, Anyang is at the heart of
China’s beginnings.
case Study
56 How to Shut down a Foreign Invested Enterprise Legitimately?
REGIONAL TRADE AND INVESTMENT
58 Weak Demand for Exports Slows East Asian Economic Growth
60 Dutch Businesses in China Perform Well

61 Chinese Investments Welcomed in Switzerland
62 EU-China Trade in Service Sectors: Challenged Future
64 Sino-EU Trade War Unlikely
66 Privatization of US-Listed Chinese Companies
68 Chinese Tech Giants Eye Brazil
70 Chongqing’s Foreign Trade Surges
COVER STORY
72 Building a “Golden” Card for Bombardier by “Sincerity”
InfoRMATION
76 Investment Projects in Zhengzhou City, Henan Province,
China
78 China Fairs & Expos
82 2013 China Market Suppliers List
LIFESTYLE
84 Colorful Blending of Exotic Inspirations
THIS IS China
88 Travel by Beijing-Guangzhou High-Speed Train II
eye on china
92 Spring Festival Memoir: In the Defense of Experiencing
“Chun Yun”
Culture
94 The Thousand Character Classic (II)
Index of Advertisements
封 二 -1
46-47
封 底
JONWAY AUTOMOBILE
永 源 汽 车
Beiqi Foton Motor Co., Ltd.
福 田 商 用 车
Anhui Jianghuai Automobile Co., Ltd.
江 淮 汽 车
Cooperation Media
虚 假 新 闻 举 报 热 线 86-10-68053271
Sponsored by ( 主 管 )
CCPIT( 中 国 国 际 贸 易 促 进 委 员 会 )
Operated by ( 主 办 )
Trade Development and Cooperation Center of CCPIT
中 国 国 际 贸 易 促 进 委 员 会 贸 易 推 广 交 流 中 心
Published by ( 出 版 )
China’s Foreign Trade Magazine
中 国 对 外 贸 易 杂 志 社
社 长 President 杨 晓 东 Yang Xiaodong
总 编 辑 Editor-in-Chief 孟 燕 星 Meng Yanxing
副 社 长 Vice President 石 净 Shi Jing
杨 复 强 Yang Fuqiang
编 辑 部 副 主 任
Editorial Deputy Director
执 行 主 编 Executive Editor
编 辑 部 Editorial Department
Tel:86-10-68053271
流 程 总 监 Operation Director
英 文 校 审 English Copyeditor
杨 蔚
Yang Wei
郭 艳 Guo Yan
竹 子 俊 Zhu Zijun
崔 晓 玲 Cui Xiaoling
赵 炜 Zhao Wei
刘 馨 蔚 Liu Xinwei
张 越 Zhang Yue
刘 英 波 ( 英 )Lewis McCarthy
莫 雷 ( 美 )Adam Morley
经 营 部 总 经 理 石 净 ( 兼 )
Marketing Department Director Shi Jing
副 总 经 理 Deputy Director 石 林 峰 Shi Linfeng
项 目 经 理 Manager 白 义 峰 Bai Yifeng
Tel:86-10-68027947 游 万 龙 You Wanlong
李 小 冬 Li Xiaodong
高 嵩 Gao Song
推 广 部 总 经 理
Distribution Department Director
项 目 经 理 Manager
Tel:86-10-68069328
李 英 宏
Li Yinghong
王 岱 凌
Wang Dailing
副 秘 书 长 兼 秘 书 处 主 任 杨 富 强 ( 兼 )
Council Secretariat Director Yang Fuqiang
秘 书 处 副 主 任 刘 晓 东
Council Secretariat Deputy Director Liu Xiaodong
联 络 专 员 Assistant 王 飞 Wang Fei
Tel:86-10-68020773 于 洋 Yu Yang
戚 英 杰 Qi Yingjie
石 林 Shi Lin
General Distributor For Overseas Subscribers
国 外 发 行 总 代 理
China National Publications Import & Export (Group) Corporation
中 国 图 书 进 出 口 ( 集 团 ) 总 公 司
Add: 16, Gongti East Road Beijing, China
Post Code:100020
地 址 : 北 京 市 朝 阳 区 工 体 东 路 16 号
Tel: 86-10-65066688-8822 65063082
China International Book Trading Corporation
中 国 国 际 图 书 贸 易 总 公 司 (GUOJISHUDIAN)
Add: Box 399, Beijing 100044, China
地 址 : 中 国 北 京 399 号 信 箱 (100044)
国 内 邮 发 代 号 80-799
国 际 邮 发 代 号 SM1581
国 内 统 一 连 续 出 版 物 号 CN11-1020/F
及 国 际 标 准 刊 号 ISSN0009-4498
AD LICENCE No. JXGS/G-0249
广 告 经 营 许 可 证 号
Domestic Price 国 内 订 价
Overseas Price 国 外 订 价
设 计 制 作
印 刷
京 西 工 商 广 字 第 0465 号
16 元 (RMB)
US$5
北 京 锋 尚 制 版 有 限 公 司
北 京 瑞 禾 彩 色 印 刷 有 限 公 司
License Mark of General Administration of
Press and Publication, the People’s Republic of China

Booming Consumption
in Chinese Spring Festival
By Guo Yan
Spring Festival is known as China’s most important holiday reunion,
and the majorities of Chinese at home and abroad will return to their
hometowns and spend the holiday with their relatives.
According to the Ministry of Railways, the railway peak season
will span from January 26 to March 6, 2013, and more than 224 million
passengers are expected to travel via trains during the period, a year-on-year
increase of 4.6 percent. What measures do you choose to get the train ticket
to go home, by phone, by the Internet or by lining up at the station?
Statistics from the Agriculture Ministry’s information website monitoring
the farm products wholesale market showed, in the first week of 2013,
27 out of 28 vegetables saw a price hike. Will the price increase or decline
during the holiday? When you are at home, will you choose to cook with
your family at home or enjoy buffets at the restaurant?
Besides booking train tickets online, many people choose to purchase
new year’s goods not only at supermarket or shopping mall, but online.
Which do you think is more convenient? At the same time, when you purchase
online, be careful of the fishing websites.
At the end of the Chinese lunar year, many people take this opportunity
to travel at home and overseas. And since 2013 is the year of snake, some
buy the collection of gold to maintain the value. So which will you choose?
Undoubtedly the increasing consumption boosts the holiday economy
during this spring festival. With the above questions, let’s go through this issue
of Special Report to find the answers.
8

Food Prices Saw Sharp Rise
By Leo Zhao
Before the 2013 Chinese Spring Festival, food prices
have been on a sharp rise.
Statistics from the Agriculture Ministry’s information
website monitoring the farm products
wholesale market showed, in the first week of 2013, 27 out of
28 vegetables saw a price hike to an average weekly RMB 4.17
per kilogram, registering a week-on-week rise of 4.5% and an
accumulative increase of 55.0% after a consecutive rise in the
tenth straight week. However, Kong Fantao, a warning expert
from the agricultural products market of the Agricultural
Information Institute under the Chinese Academy of Agricultural
Science, holds that the current rise of vegetable prices is
normal seasonal fluctuation, absolutely conforming to the rules
in the past years.
Besides, monitoring data from the Agriculture Ministry
over 580 key vegetable counties shows that by the end of November,
2012, the area for growing vegetables hit 1.14 million
mu, climbing 2.3% year on year. In the absence of extreme and
unexpected weather, the vegetable supply would be adequate
in the future.
Dai Zhongjiu, President of the Chinese Vegetable Circulation
Association, attributed the upward-price of vegetables
to the continuous low temperature. The leafy vegetable is the
most vulnerable to severe weather, as this kind of frozen-prone
vegetables, difficult to store, is apt to suffer from loss, which
consequently pushes up the price. The cold weather slows
down the growth of such vegetables as cucumbers, tomatoes
and green peppers, reducing the yield and then the supply of
vegetables.
According to Kong Lingyu, Vice Director of the Department
of Market System Development under the Ministry of
Commerce, the domestic circulation domain of vegetables and
fruits implies many problems such as long supply chain and
too many circulation sections.
9

On the one hand, as China’s urbanization and industrialization
course accelerates, the suburb of the city possesses less land, leading
to decreasing planting area around the large- and medium-size cities
and further to a lower self-sufficiency of vegetable supply in cities.
The farm products which could be supplied from the nearby now
have to be transported from other regions over a long distance, raising
the cost for transportation.
On the other hand, the numerous circulation sections drive up
cost. Industry insiders disclosed that the farm products have a circulation
cycle including purchasing from the production place, intermediate
transportation, wholesale to the sales destination, wholesale
in the second-level market and terminal retail, each of which section
pushes up the price by at least 5% to 10%. The cost-benefit statistics
from the National Development and Reform Commission shows
that from 2006 to 2011 the cost for vegetables increased 18.55% on
a yearly basis, among which 14.18% were attributable to the fees to
hire workers, 15.21% to chemical fertilizers and 21.06% to machinery
operation.
To address the above-mentioned problem, several ministries
and commissions have adopted a package of measures. It is learned
that the State Council has recently unveiled 10 measures to lower
vegetable circulation cost, such as lowering prices of water and electricity
for the production and circulation of farm products as well as
standardizing and reducing fees collection of farm products
in the market.
The Ministry of Finance and the State Administration
of Taxation have jointly issued the Notice on the
Added-Value Tax Exemption for Vegetables in the Circulation
Section, which said that with the approval from
the State Council since January 1, 2012, the added-value
tax will be exempted for vegetables in circulation.
The Ministry of Agriculture requires the local
departments at all levels to closely monitor the market
trend of farm products, ensure sound production and
market supervision of fresh farm products and to fully
prepare for forecast and warning as well as information
release. Therefore, the local departments concerned are
supposed to timely address any market emergency after
perceiving and reporting the emergencies early. Collaborating
with relevant departments, the local departments
shall earnestly put the “green channel” policy for the
fresh farm product transportation into full implementation,
and crack down on such violations as hoarding and
profiteering on vegetables and bidding up prices so that
the farm product market can operate soundly without
false information or speculation.
The Ministry of Commerce has asked for the local
competent commercial departments to strengthen
management over local commodity stock such as vegetable
stock and to timely release the stock of reserved
commodities. In addition, the Ministry of Commerce is
constructing a production-demand chain to reduce the
sections along the circulation cycle.
However, Dai Zhongjiu spoke frankly that despite
that many measures had been implemented, there is still
room for the domestic vegetable price to rise before the
Chinese Spring Festival and only after the Spring Festival
can the vegetable price fall gradually to be normal.
Industry insiders also believe that in order to stabilize
vegetable supply in the market at a reasonable price,
the governmental departments are supposed to put more
efforts on channeling and supporting the expansion of
“direct vegetable supply”. Vegetables directly supplied to
communities from vegetable-producing enterprises may
considerably lessen the intermediate sections and thus
reduce losses and prices.
Kong Lingyu said that on the next step the central
government will further build up the “mayor-responsible
vegetable basket” mechanism and improve the quantitative
assessment system. To solve the problem that it is
difficult for vegetable growers to sell vegetables while
expensive for citizens to buy vegetables, the Ministry of
Commerce will bring the market mechanism into full
play and build a modern circulation system for fresh farm
products with vegetable growers paired with wholesalers
as the major channel, vegetable growers paired with
supermarkets as the future trend, direct supply and sales
as a supplementary instrument and online transaction
as a trial approach. In this way, the objective to “reduce
circulation sections, lower costs, enhance efficiency and
improve effectiveness” can be achieved.
10

Hot Booking of New Year Eve Dinner
By Lynn Yu
It’s less than a month from the
Spring Festival of the Year
of Snake and many restaurants
are receiving a booming
booking of New Year’s Eve Dinner.
With no doubt, diversified
dishes and varying prices of set
meals are the key words of the
New Year’s Eve Dinner this year.
Beijing—diversified smallsized
set meals
Some time-honored famous
restaurants, such as Quanjude,
Fangshan, Fengzeyuan and Sichuan
Restaurant are embracing
a hot booking of
New Year’s Eve Dinner.
Separate rooms
are extremely hard to
get, and even half of
the lobby seats are
already sold.
To adapt to the
downsizing of families,
some restaurants
introduced small-sized
New Year’s Eve Dinner
for families with only a few
members this year. According to a
person in charge of Fangshan Restaurant,
it will provide guests with
a RMB 298-New Year’s Eve Dinner
set meal at a preferential price
of RMB 268 per capita. What’s
more, Fangshan Restaurant will
be decorated like a palace inside
out, and to add the atmosphere of
festival, many shows with Chinese
characteristics such as face changing,
acrobatics and magic will be
performed in the Ripple Hall of
the restaurant. Fengzeyuan Restaurant
does not provide set meals
for New Year’s Eve Dinner, but
allows guests to freely order dishes.
At the same time, it has invited the
“God of Wealth” to give new year’s
wishes and gifts to guests and invited
folk artisans
to sell works of art
in the restaurant,
to create a joyous
festive atmosphere for
guests.
Guangzhou—local
restaurants more popular
this year, the booking period of New
Year’s Eve Dinner in Guangzhou is much earlier
than prior years. In previous years, guests
make reservations one or two months before
the Spring Festival, but this year they have to
do it half a year in advance. Some people even
paid a deposit for this New Year’s Eve Dinner
a year ago. Lot of restaurants and star hotels
have already been fully booked by now.
Separate rooms of time-honored restaurants,
including Guangzhou Restaurant,
Lucky Restaurant, Panxi Restaurant and
Taotaoju Restaurant, have all been fully
booked. Seats in some old-brand star hotels
like Garden Hotel and Dongfang are also
hard to get. In Yuexiu District and Liwan
District, New Year’s Eve Dinners priced at
RMB 1000 or so and starting at 5:00 p.m.
and 7:30 p.m. were sold out in November
last year.
Ni Hong, Secretary General of
the Guangzhou Restaurant & Catering
Association says that in recent years,
the costs of labor and food materials are
very high, and local restaurants have
more convenience in providing New
Year’s Eve Dinner for so many people
in aspects of procurement channels,
food materials and labors; besides, traditional
diets are much more popular
during the Spring Festival. Therefore,
famous Cantonese cuisine restaurants
are surely the most favorite.
Shanghai—semi-finished set
meals receive hot booking
according to the Evening News,
as the Spring Festival approaches, semifinished
set meals for the New Year’s Eve
Dinner are booked in an increasingly
large amount. We get the information
from Shanghai Restaurants Association
that the sales volume of semi-finished
set meals for New Year’s Eve Dinner are
increasing year by year in Shanghai, and
11

the overall sales volume this year is predicted
to grow by 20%. In addition, due to higher
costs of raw materials, human resources and
rents, the prices of semi-finished set meals will
increase by 5%-8% this year.
A person in charge of the Xinya Cantonese Cuisine
Restaurant says that many time-honored restaurants only
receive a batch of guests during the New Year’s Eve. As seats
in restaurants are limited, a number of consumers turn to semifinished
set meals. Presently, Xinya has completed about 70% of
its targeted sales volume and the sales of semi-finished set meals
is predicted to grow by 20% or so compared with last year. A
principal of the Shanghai Old Restaurant Hotel said that this
year the semi-finished set meals for New Year’s Eve Dinner are
priced at about RMB 700 and RMB 1000 respectively, a slight
increase over that of last year.
Many restaurants are yet to list the specific prices of the New
Year’s Eve Dinner in the contracts. “This year, frequent extreme
weather affects the prices of raw materials and correspondingly
disables restaurants to determine their menus and prices for the
New Year’s Eve Dinner”, said Mr. Liu, a manager of a chain
restaurant in Beijing. In addition, during each Spring Festival,
restaurants have to pay high wages to keep waiters from leaving,
and these costs will be transferred to the prices of New Year’s Eve
Dinner. At present, the prices of human resources and raw materials
are about 10% higher than those of last year, and they will probably
be even higher during the Spring Festival.
Tips:
Generally speaking, when consumers make a reservation,
sellers will demand a deposit. Consumers have to distinguish
between “deposit” and “front money”. “Deposit” acts as a kind of
guarantee, and it shall not exceed 20% of the total amount. If the
seller defaults, it shall pay a double “deposit” to the customer; if the
consumer defaults, the seller will not return the “deposit”. “Front
money” is of the nature of advance payment. Whether the seller or
the consumer defaults, the other party can take action according to
the previous agreement or commercial practices.
It has become “latent rules” that the set meals for New Year’s
Eve Dinner lack variety and a minimum consumption amount is set
to reduce the cost of restaurants. When a consumer makes a reservation
for the New Year’s Eve Dinner, if the restaurant does not
tell the consumer that the dishes included in the set meals are unchangeable
and other relevant information, the restaurant infringes
the consumer’s right to know and right to choose.
When making a reservation for New Year’s Eve Dinner, a consumer
shall request for signing a written contract with the restaurant
which clearly specifies whether the restaurant will return the
deposit if he/she fails to go for dinning, whether bringing drinks of
his/her own is allowed or not and the quantity, variety and prices of
the dishes. Besides, consumers shall properly keep the invoices,
receipts and other relevant certificates, to claim for his/her rights in
case of a dispute.
On the threshold of 2013, the hazy
weather lasts for days in China’s
central and eastern regions, signifying
severe pollution in many domestic
cities. As the Chinese Spring Festival of
the Year of Snake is approaching, fireworks and
firecrackers are to go on the market. As a result,
the general public is concerned about that setting
off fireworks and firecrackers may give rise
to pollution.
Firework show is part of the traditional
culture of the Chinese Spring Festival, but a
mass of particulate matters such as sulfur dioxide,
nitric oxide, smoke and carbon granules
are released in firework and firecracker displays,
where PM2.5 primarily comes from.
According to the monitoring of the environment
protection bureaus, on the New Year’s
Eve of last year, the PM2.5 density in Beijing
soared to 1,000 mcg/m 3 from the usual dozens
of mcg/m 3 , and 245 mcg/m 3 was reached in
Shanghai.
The newly-issued Ambient Air Quality
Standard (AAQS) stipulates that for the 1stgrade
air quality, the cap of PM2.5 density
is 35 mcg/m 3 and that of the 2nd-grade is 75
mcg/m 3 .
Huang Wenhui, Chairman of the Beijing
Commerce Chamber of Liuyang Fireworks, said
that in the recent years as the forest is preserved
from lumbering, the local enterprises have to
purchase charcoal from external sources, usually
from combusted weedtree, which is even mixed
with wheat straws. Fireworks and firecrackers
made from such charcoal, despite low costs, may
release lots of choky smoke.
In addition, the degree of pollution is also
subject to the purity of the crude drugs for gunpowder.
For instance, the crude drugs for fireworks
can be categorized into three classes — A,
B and C, and the pollution degree increases by
about 30% down each class. In order to control
cost, many an enterprise purchases the lower-purity
B and C crude drugs, which worsens pollution
caused by setting off fireworks and firecrackers,
said Wu Liyu, General Manager of Beijing Fireworks
and Firecrackers Co., Ltd.
According to Zhao Jiayu, member of the
China Fireworks and Firecrackers Technical
Committee for Standardization and Professor
from Beijing Institute of Technology, adoption
of environmental-friendly raw materials and
drugs is an effective means to ease pollution
from firework and cracker displays.
The Notice on Suggestions from the State
Administration of Work Safety for Further
Strengthening Safety Supervision and Management
on Fireworks and Firecrackers (No. 53
12

Eco-fireworks Light the
Snake Year Spring Festival
By Isabella Guo
File for short) forwarded by the General Office of the State
Council at the end of 2010 stresses “dangerous products containing
large proportion of highly sensitive drugs yet without
fixed track in the process of combustion are forbidden from
being manufactured and those products considerably pollute
the environment shall be phased out.” Although this initiative
favors the R&D, manufacturing and sales of eco-friendly fireworks,
the actual effect is far from being satisfactory.
Featured by green raw materials,
full combustion and less
pollution,
the large-size and professional fireworks for
the Olympics and World Expo can definitely
go into mass production on a reasonable scale, according to
Chen Yanwen, designer of the firework chip for such wellknown
firework effects as “big footprint” and “Olympic
rings”, and General Manager of Beijing Youlida Technology
Trade Co., Ltd. However, due to heavy cost and high market
risks, without government’s support or consumers’ recognition,
the specialized wholesale companies and retailers are
confronted with many problems to popularize the high-tech
and environment-friendly fireworks.
During the 2012 Chinese Spring Festival, in line with
the No.53 File, Beijing began to implement the local new
standard, prohibiting combined fireworks containing inner
tanks. This move eroded the sales revenue of some wholesalers
and retailers by about 30%. Containing a small amount of
drugs, the combined fireworks without inner tanks are safer
and more environment compatible, although they have lower
crack sound and smaller fire-flower patterns.
Pan Di, General Manager of Panda Fireworks said that
to cater to the market demand, the fireworks and firecrackers
for the 2013 Chinese Spring Festival will improve in terms
of varieties, sound, fire-flower patterns and environment protection.
With hissing or cracking effect, the newly launched
“xiangzi”-carried fireworks this year merely has a sound about
1/3 of that of the traditional fireworks.
According to Xu Xuli of Xiyangyang Co., Ltd., with
techniques replacing the former mud bottom technique, the
bottom-craved firecrackers the company makes
release an amount of harmful
smoke around
20% less compared
with other
products of the
same kind.
It is learned
that the fireworks
and firecrackers
during this year’s
Spring Festival are
likely to sell at a lower
price than those in the
previous year. Prices
of the high-end combined
fireworks may
go up slightly over
last year and supply of
the intermediate products priced within RMB 300 will be on
the rise and that of the small-size fireworks and firecrackers
within RMB 100 may decrease moderately. Pan Di revealed
that Panda Fireworks will sell fireworks and firecrackers at
cheaper prices, approximately 10% to 20% less. Only RMB
6-8 for the cheapest firecracker — 100-piece mini flashbang
per packet. More varieties of the mid-range products at a price
of RMB 100-500 will be launched for the non-inner-tank
combined fireworks.
13

Watch Out for Fishing Websites
While Shopping Online
By Cathy Hu
Nowadays, China has 220
million Internet users.
Shopping online is in vogue
for the 2013 Lunar New
Year. According to a monitoring report
from the Ministry of Commerce of
China, during six days from the New
Year’s Eve to the sixth day of January
of 2013, key retailers and catering
businesses across the country racked
up RMB 470 billion in sales, growing
by 16.2% compared to the 2011
Spring Festival. Sales on e-commerce
websites has skyrocketed. During the
month prior to the 2009 Spring Festival,
sales on Taobao Marketplace —
a Chinese language website for online
shopping — reached RMB 280 million
and the number surpassed RMB 100
million at the same period in 2010.
Compared with conventional sales
fields, shopping online during the
Spring Festival boasts three conspicuous
advantages: a rich variety of offerings,
great price performance ratio and
convenient delivery. Nowadays, a large
number of consumers tend to purchase
online famous, quality, special and new
agricultural products from all around
the country.
Many e-commerce websites have
focused on promotion activities to entice
customers for the holiday shopping
this year.
This year the Taobao Marketplace
promoted its New Year sales by displaying
a wide range of special local products
including food that is of strong
Chinese northwest region flavor like
roast whole lamb, glutinous rice cake,
raisin and beef. In addition, the Taobao
Marketplace has gathered information
on the Spring Festival traditions
distinctive to specific regions and will
distribute free discount coupons that
can be used in specialty stores starting
on the 7th of January, integrating
traditions into its New Year promotion
activities. When you click on the New
Year promotion page and participate
in a quiz called “matching couplets to
gain New Year gift money”, you will
have the chance to win “New Year gift
money”. It is reported that during the
promotion season of the Taobao Marketplace
some goods will be directly
delivered from the place of origin and
some will be presold. Goods such as
Chang Farmhouse Pork and Hubei
Honghu Lake Lotus Roots will be delivered
from the place of origin.
In order to better guide clients to
make perfect purchases for the Spring
Festival, Jingdong Mall launched
“Stunner — Annual Ranking List”,
listing best products based on multidimensional
criteria including“customer
reviews” and “sales volume”which
will be sold at varied discounts. A 32-
inch LED television is priced lower
than RMB 1600. A flurry of marketing
activities are expected. Moreover,
a promotion activity named “going
home empty-handed” will immensely
unburden customers who are far away
from home during the holiday season.
Customers can have their ordered purchases
delivered to their home directly
so that they don’t bother carrying bags
and boxes on their way home.
In recent years, banks and Alipay
offered express payment gateways in
collaboration and big banks unified
their online payment experience, which
in consequence dramatically expanded
the online customer base. Since the year
2012, it has become an established way
to attract more Internet customers for
banks by providing discounts on paying
online via express payment gateways.
The reporter was informed by Alipay
that, targeted at online shopping for the
14

Spring Festival, many nationwide
banks including Bank of China,
Bank of Communications, China
Industrial Bank Co., Ltd., China
CITIC Bank, Guangdong Development
Bank and Agriculture
Bank of China as well as regional
banks like Bank of Shanghai have
taken promotion tactics that offer
“discount” and “direct reduction”
for customers who use express
payment gateways. Customers can
enjoy as much as 85% discount via
online payments.
However, there are some
downsides to New Year online
shopping: Internet vendors are
a hodgepodge of groups selling
goods of vastly different quality,
which presents risks for online
shoppers. They should have a pair
of keen eyes for products.
Experts from Security 360
warned that some people under the
cover of legitimate online stores
lure customers with popular items,
and once successfully deceived
them they will send the victims
links that actually are games or recharge
platforms to swindle them
out of money. It is said that they
continue to fool the victims in the
name of “transaction failure”, “system
upgrading” or “refund”.
The latest statistics from Anti-
Phishing Alliance of China show
that by December 20th, 2012, the
alliance has dealt with 1,295 fishing
websites, among which travel
planning and flight booking sites
like eLong rank among the “top
three”.
To date, the “credible website”
verification by ChinaNet has been
embraced by numerous Internet
platforms including Microsoft,
Sogou, Sina, Tencent, Aliyun,
Taobao and Kingsoft Internet.
Now netizens can quickly verify
any website through search results,
browser address bar as well
as official websites. The person in
charge at ChinaNet said that with
the help of three security guards —
“search+browser+official website”,
netizens can easily verify the identity
of any website so as not to fall
into fake websites.
Supermarkets, Malls Scramble
to Woo Consumers
As spring festival approaches,
customers of supermarkets
and shopping malls could
sense an increasingly strong
atmosphere of festival. As the number
of consumers becomes larger and larger,
more and more supermarkets and shopping
malls are doing more promotions
to attract consumers.
Most products at higher price,
while liquor at lower price
The supermarket is always the best
place for New Year shopping. The vast
array of food products are laid on the
shelf, but the prices vary.
The price of milk has witnessed
the largest increase. According to a
previous statement by Bright Diary, the
price of fresh milk and yoghurt is lifted
by about 5% on weighed average. So far
the price of at least 10 milk products has
been raised, with the margin exceeding
10% for some varieties. Some insiders
By Leo Zhao
say that the rise of milk price is mainly
due to the rise of material price. According
to the Ministry of Agriculture, the
purchasing price of raw milk averaged at
3.28 yuan/kg in 10 provinces, rising by
about 2.5% on a year-on-year basis.
The amount of price increase of
festival accessories is also very large. According
to staff at Carrefour, the varieties
of accessories this year outnumbers
that of last year. The number of festival
hanging accessories has surpassed 40.
The price of festival accessories has
climbed by 20%. Consumers nowadays
pay more attention to the quality of
products, so the styles and varieties have
become more and more diversified.
However, although many food
products have seen price rise, consumers
could buy high quality liquor at very
cheap price. Affected by the plasticizer
and prohibition of alcohol consumption,
the market of white liquor cools down.
As the spring festival approaches, white
15

liquor sellers began to organize promotions to stimulate consumptions,
with the middle-level and high-end white liquor consumption
growing rapidly. The high-end white liquor, including Wuliangye,
has also seen big promotions. At the supermarkets, sellers have put
the wine products at noticeable places, tagged with promotion labels.
More varieties of gift packages
This year, there is a wide array of gift packages in terms of color
and variety. Some consumers are in favor of the new trend, thinking
that the products packaged as gifts are more reliable and could be
used for home consumption or sending gifts; however, some consumers
hold the opposite views, thinking that the gift packages would
waste materials, and are quite expensive.
Compared with previous years, the purchase of tobacco, wine,
healthy products and other traditional gift products, still grabs a large
share of the gift markets.
Besides, the purchases of organic food for self-use and gift is increasing,
which has become a new trend of the gift market. Although
fake organic food is exposed in many cities, the organic market is still
heated. Green, healthy and natural food, such as organic cereals, fruit
and vegetable powder, organic vegetable, green mountain delicacies
and harmless eggs, have topped the purchase list of festival products.
Temple fair moved into shopping mall
This year, many shopping malls such as CARE City Shopping
Center, The Place, New Yansha Mall will hold traditional activities,
such as moving the temple fairs into the shopping mall, which include
lantern riddles and dough figures, and live interaction with the
audience.
Cha Wei, director of the marketing department of New Yansha
Mall, said that in the first six days of the lunar month, the mall will
feature lion dance performance in order to create spring festival atmosphere.
About 50 handcrafts men will show their original creations,
which is hard to copy at outdoor traditional temple fairs.
Wei Donghui, who is in charge of activity department of
CARE City Shopping Center, said that the mall mainly features a
showcase of handicrafts, extracting the essence of traditional temple
fairs. They are trying to attract genuine successors of the art, and to
show the best of Beijing traditional culture to the audience.
However, what is important is that the shopping center shall be
loyal to the traditional culture and make it acceptable to consumers when
organizing such activities, rather than following a mere formality.
According to news from the website of the
Ministry of Railways, the rush of spring
festival transportation will last 40 days
starting from January 26 to March 6,
2013. It is predicted that railways across the country
will deliver 224.5 million travelers during this
period, representing a year-on-year increase of 9.93
million or 4.6%.
This year, the Ministry of Railway adopted
several measures to facilitate the purchase of train
tickets ahead of the spring festival, in which, the
purchase online is more convenient, so the large demand
propels more and more people to buy tickets
online. Data from Guangzhou Railway (Group)
Corporation show that during January 26 to January
31, about 2.17 train tickets will be sold, about 70%
of which were sold through telephone and internet.
38.2% of the train tickets sold on January 15 across
the countries were paid through the internet.
Due to the heavy internet traffic on 12306.cn,
the train tickets are extremely hard to buy during
the spring festival rush; many internet browser firms
such as QIHU 360, Kingsoft Network Browser
Liebao and Firefox have timely introduced ticketbooking
assistant plug-in softwares for searching
the spare tickets for travelers. They add the ticket
plug-ins to the ordinary browsers, and when the users
log in the ticket-booking website of the Ministry
of Railways “12306.cn”, the ticket booking webpage
will automatically refresh the ticket information
repeatedly, until the tickets are successfully booked.
According to Kingsoft Liebao Browser, by now, the
number of people using the application has exceeded
one million.
QIHU360 has also introduced a safe browser
6.0 for refreshing the spare tickets, and it also alleged
that the version of 360 browser has helped 3
million users successfully get the train tickets back
home. In TMALL, pay-per-use “ticket-scrambling
software” sells very well.
Though the ticket-booking software indeed
has helped some users get the tickets, the 12306
website indicates that these applications have aggravated
the burden of the internet.
However, browser firms do not agree with the
opinion that the software occupies internet resources.
An expert from Kingsoft says, “From the technical
perspective, we are just helping an ordinary person
to refresh the 12306 website. If the buyer gets
the ticket, he/she will not visit the 12306 website
again. If the buyer fails to get the ticket, he/she will
repeatedly visit the website, which will cause much
unnecessary pressure to the bandwidth”.
QIHU360 also made similar response: “Our
working principle is that we use the ‘intellectual
route upgrading technology’ to control the webpage
refreshing frequency and it will not ineffectively occupy
too many servers of the 12306 website.”
16

Have You Bought Train Tickets?
By Hu Wenxiu
It is reported that the Ministry
of Industry and Information Technology
has requested QIHU360, Sougou,
Kingsoft and Aoyou to shut down the
plug-ins. In response, QIHU360 indicates
that it is seeking for reasonable
solutions to meet the requirements of
the competent departments. Kingsoft
also expresses that they are communicating
with the Ministry of Railways to
actively help users buy train tickets. Yet,
so far, the plug-in in Kingsoft Liebao
Browser and 360 Security Browser is
still available for use.
Nowadays, for many people, getting
a ticket mainly depends on the
internet speed and skills, rather than
energy and patience. As more and more
people turn to the “refreshing plug-in
for tickets”, the efficiency gap between
online and offline ticket-buying has
been enlarged. With the help of the “refreshing
plug-in for tickets”, train tickets
are sold out more quickly, and many hot
tickets are sold out in five minutes after
the selling starts.
Most of the labor workers come
from rural areas. According to the latest
data from the China Internet Network
Information Center (CNNIC), the
internet popularizing rate of urban citizens
was 59.1% and that of the villagers
was merely 23.7% in 2012. Though
some of the labor workers get to know
something about internet after coming
to cities, they are not as familiar with
it as students, white-collars or other
groups of people.
Zhu Jiansheng, Deputy Director of
the Institute of Computing Technology
of China Academy of Railway Sciences,
believes that selling tickets through the
internet and telephone originally aims
to create a fair environment for buying
tickets, but using the “ticket-scrambling
plug-in” equals to jumping a queue,
which may damage the order for buying
tickets and bring harm to the security of
the whole system for buying tickets, as
the software per se is destructive.
Shi Xiaohong, an expert in internet
security alarms that buying a ticket
online requires the user to open an
online banking business and users with
online banking are more vulnerable to
attack of Trojan virus. He suggests that
when buying tickets online, netizens
should use a piece of security software
to prevent Trojan virus from stealing the
money in the online banking account.
Nevertheless, whether there is
ticket-scrambling software or not,
relevant departments should be more
concerned about how to solve users’ difficulty
in buying tickets and improve
users’ experience on ticket-buying websites.
Zeng Jianqiu, a professor from
Beijing University of Posts and Communications
holds that the root cause of
these problems is that the ticket-buying
system is not good enough. He recommends
the competent departments to
treat the ticket-scrambling software
rationally and objectively and listen to
opinions of all parties concerned.
17

Chinese Outbound Travel Soaring
By Guo Yan
Recently, according to Ctrip, a
Chinese travel website, Sanya
ranked No.1 among the domestic
travel destinations and
Hong Kong as No.1 among the overseas
travel destinations.
As airfare and hotel prices are increasing,
the average prices of most domestic
travel routes are 10% higher than
this time last year. In order to attract
more travelers, many travel agencies and
travel websites offer some discount for
those customers who book in advance.
According to the data from Qunar,
during the period of Spring Festival,
Sanya, Beijing, Hong Kong, Xiamen,
Shanghai, Guangzhou, Harbin, Hangzhou,
Chengdu, Nanjing, Shenzhen,
Lijiang, Fenghuang and Guilin are
the most popular tourist destinations,
in which, the hotel price in Sanya is
up 3 times than that of the off season.
While, the hotel price in other popular
destinations such as Hong Kong, Xiamen,
Lijiang and Harbin, is up 20%.
However, regarding the problem
of higher prices in Hainan during the
Spring Festival, this year the department
of tourism of Hainan Province
released a document that hotels should
reduce their price of rooms by at least
10 percent during the holiday, which
starts Feburary 10, compared with last
year’s prices. According to the provincial
price authority, the highest daily
cost for a standard room, including the
extra service fees, should be less than
5,000 yuan ($802). If prices exceed the
cap, the hotel needs to get approval
from the government. It is regarded
as the hardest measure in recent years.
According to the statistic from Ctrip,
it is predicted that the room price will
drop by around 10%.
In terms of outbound travel destinations,
according to the ranking list by
Mango of 2013 Spring festival overseas
travel places, the top ten destinations are
Thailand, Sabah, South Korea, Australia,
New Zealand, Europe, the United
States, Maldives, Bali, Seychelles.
Compared with the off-season, the price
during Spring festival increased around
30% on average, while the amount of
travelers increased by more than 50%, a
slight increase compared to last year.
This winter, the Chinese film A
Travel to Thailand encouraged more
people to choose Thailand as their
travel destination. According to the
insiders of tourism industry, South East
Asia is always popular with Chinese
travelers. Additionally, in December of
2012, Cambodia and Thailand commenced
a single visa scheme in a move
to encourage more foreign tourists and
business people to visit these Southeast
Asian nations. With the issuance of the
ACMECS single visa by one country,
either Cambodia or Thailand, the holders
of this visa are authorized to enter
both Cambodia and Thailand.
Even though Europe is in the
period of off-season, because of lower
airfares, the weakened euro-zone economy
plus many famous tourism spots,
it is still an attractive destination for
Chinese travelers. According to Mr. He
Yong, vice general manager of the department
of travel division from Ctrip,
in 2012, the tourist parties organized
by Ctrip were doubled; he predicted
that in 2013 the overall tourism market
a to the United States would maintain a
growth of 40%.
To attract more Chinese travelers
to outbound travel, many overseas
countries launched new policies, such
as to simplify the related travel visa
procedures. By way of example, Chinese
tourists can visit Russia visa-free
through group travel. Chinese citizens
who travel to Russia in a group of 5 to
50 don’t need to apply for visa, according
to the mutual visa exemption agreement
between China and Russia.
Director of the China National
Tourism Administration, Mr. Shao
Qiwei mentioned on January 10, that
in 2013 two laws including “Tourism
Law” and “National Leisure Outline”
will be implemented, so that China
tourism industry will embrace an important
historic opportunity with legal
guarantee. He predicted that in 2013,
the target of overall income of national
tourism industry will attain RMB 2.85
trillion, an increase of 11%.
18

As a global strategic asset, even
if its price goes down, the
gold still features high yields,
low risks and high liquidity
as a hard currency. For many Chinese
people, the spring festival is a peak
season for purchasing gold. According
to Beijing Daily, during the New Year
Festival, about 400 kilograms of gold
has been sold at Caibai Gold, with the
sales revenue nearing 600 million yuan,
showing great demands for gold during
spring festival.
Liu Shanen, senior expert of gold,
says that there is low relativity
between gold and stocks, real
estate, bonds and other investment
assets. Gold could improve
the family asset portfolio
in the way that it could neutralize
risks brought by other
investments.
The end of each year
also witnessed the promotion
of jewelry with the animal
of year. Research reports
with high authorities say that
there is still large growth
space for international gold
price, and as the number of
gold consumers becomes larger and
larger, the collection of gold with animal
of the year will become increasingly
popular.
The gold bar designed for the year
of snake has been put at the most noticeable
place at Caibai Gold Store, Zhoudafu,
Ruijin International and China
Gold. According to Wang Han, sales
manager of Caibai, the gold bar of the
year of snake designed by China Gold,
China Gold Coin, Ruijin International
is quite popular on the market.
“The investment gold bar of the
year of snake features a wide array of
varieties, including 10g, 20g, 500g and
1kg. During the New Year festival, there
is promotion activity of ‘selling gold bar
and sending silver bar’, and the sales
of investment gold bar is very popular.
Many consumers would buy several kg
gold bar,” says Jiao Guangyi, deputy
sales manager of Sun Gold Store.
A financial consultant told the
reporter that many people have pinned
their hope of maintaining asset value on
gold. Issued on a yearly basis, the gold
bar for new year festival features high
Gold Still Popular
with Chinese Investors
artistic value and delicate handicraft,
and has high value for collection. So the
market is very hot.
Regarding investment into gold
bar, expert Lu Lei points out that as
part of household asset portfolio, it is
appropriate to use it as long-term (5-6
years) investment. But its liquidity and
market depth are low as a short-term
investment product. Also, the value
increase of gold bar depends on the
international gold price and the scale of
circulation, and investors shall be fully
aware of the risks involved. But Lu also
mentioned that the gold bar designed
for animal of year is mainly for the
purpose of collection, but as investment
its value increase is outperformed by
investment gold bar. Investors shall be
more cautious about this.
By Jonny Wei
It is said that given the similar material
value for precious metal products,
investors pay more attention on the longterm
investment returns. So the precious
metal products featuring classic historical
or cultural elements, famous handicraft
man, great styles, and rich varieties will
be highly popular among investors. It is
also said that the panda gold and silver
stamp and gold and silver bar of the year
of snake promoted by Ruijin International,
have broken the precious metal sales
record on December 21, 2012, the day of
issuance. The order reaches 400 kg, and
the sales revenues have surpassed 100
million yuan.
Industry experts suggest that
consumers shall also consider the price,
product issuer, possibility and policy of
counter purchase when buying gold or
silver bars for collection.
Also in recent years, an increasing
number of consumers will
go to pawning house to buy gold.
According to Baorui Tongdian,
it is known that the sales of gold
jewelry and god bar have accounted
for 70% of the total sales of the
pawning house.
The reason for going pawning
house to buy gold is the cheap price.
Wang Deqiang, general manager of the
operation center of Baoruitong Pawning
House, said that spring festival is a
hot season for selling gold. Consumers
would purchase gold for self collection
or sending gifts and the jewelries
they choose have low weight and great
delicacy. Nowadays the price of pure
gold at the gold store is about 405-408
yuan/g and some brand product will
value at 450-470 yuan/g. But the price
at the pawning house is much lower.
Take Bao Ruitong for example, the
price of gold jewelry is only 370 yuan/g,
10% lower than the gold store, which is
about 40 yuan/g.
19

The Impact o f H o l i d a ys
on China-EU Trade
By Hongbo Cai, Guiqiang Feng
With the rapid development
of the economy and
society in recent years,
holiday is becoming more
and more important in people’s daily life,
such as the Chinese Spring Festival, Labor
Day, National Day and the Western
Christmas, Halloween, and Thanksgiving.
People make the best of their free
time to enrich their lives. During the
holidays, more and more Chinese people
choose to travel abroad and there are
more and more foreigners who choose
China for tourism.
The impact of holidays on China-
EU trade in goods
As shown in Figure 1, China’s
import from EU are stable throughout
one year, but the performance in export
is significantly different. China’s export
to Europe changes greatly in different
months of the same year, while the
trends of the changes are basically the
same in the different years.
Here take the cases of the Chinese
Spring Festival, Labor Day, National
Day and the Western Christmas for further
analysis.
In February, China’s export to Europe
would be drastically reduced, down
to that year’s lowest. This may be owing
to the most important holiday in China
- the Spring Festival. During Spring
Festival, almost all the Chinese factories
and shops are out of business, resulting
in significantly decrease in export.
From February to April, the export
Figure 1: China’s Foreign Trade with EU (Thousand dollars)
(Jan 1, 2009-May 30, 2012)
40000000
35000000
30000000
25000000
20000000
15000000
10000000
5000000
0
1 2 3 4 5 6 7 8 9 10 11 12
Export to EU 2009
Export to EU 2010
Export to EU 2011
Import from EU
2009
Import from EU
2010
Import from EU
2011
Export to EU
2012
Import from EU
2012
Data source: Foreign Economic and Socio-economic Development Statistical Database
would increase sharply, and there would
be a slight decline in late April and early
May on the impact of the Labor Day.
From May to September, the
export would increase sharply, and in
October a sharp decline. In August and
September generally the peak of business
orders for Christmas would appear.
The decline in October has two reasons,
one is the decline of the number of business
orders from Europe after the rapid
increase in August and September, and
the other reason is Chinese National
Day in October.
From October to November, the
export would increase considerably and
relatively decrease in December. There
would be a large amount of consumption
during the Christmas season, so the
temporary Christmas orders made by
Europeans lead to a substantial increase
in export.
The impact of holidays on China-
EU trade in services
Along with the appreciation of the
RMB , the improvement of transportation
conditions, and development of
China-EU relation, deepened trust and
comprehension, the number of Chinese
people going to Europe and the number
of Europeans coming to China greatly
increase. Consumption by these people
has a great promotion on bilateral trade.
See Table 1.
The number of Europeans coming
to China changes greatly throughout
one year, while the trends of the changes
are basically the same among different
countries and different years. See Figure
2 and Table 2.
20

Table 1 The Number of Europeans Coming to
China (ten thousand), 2010-2011
Table 2 Major Festivals in Europe
Time Britain France Germany Total
201001 4.21 3.59 4.49 12.29
201002 3.53 3.05 3.42 10
201003 5.55 4.03 5.96 15.54
201004 5.03 4.44 4.93 14.4
201005 4.99 4.96 5.79 15.74
201006 4.38 4.04 4.71 13.13
201007 4.94 5.09 4.73 14.76
201008 4.85 5.14 5.44 15.43
201009 5.14 4.39 5.39 14.92
201010 6.18 5.75 6.81 18.74
201011 5.1 3.64 5.22 13.96
201012 3.61 3.16 3.98 10.75
201101 4.37 3.61 4.81 12.79
201102 3.86 3.42 4.34 11.62
201103 5.32 3.93 5.21 14.46
201104 5.88 4.82 5.89 16.59
201105 5.12 4.42 5.77 15.31
201106 4.45 3.64 4.61 12.7
201107 5.08 4.57 5.13 14.78
201108 4.97 4.73 5.78 15.48
201109 5.12 3.91 5.51 14.54
201110 6.2 5.19 7.01 18.4
201111 5.11 3.71 5.49 14.31
201112 4.08 3.37 4.15 11.6
Data Source: National Tourism Administration of the People’s
Republic of China.
Figure 2: The Number of Europeans Traveling to
China (ten thousand) (Jan 1, 2010-Dec 12, 2011)
20
18
16
14
12
10
8
6
4
2
0
Festival
Date
New Year's Day January 1
Easter
Labor Day (May 1) May 1
Ascension Day
Pentecost
Variable (March / April)
Variable (May)
Feast of the Assumption August 15
Variable (May / June)
Halloween November 1
Christmas December 25
Boxing Day
St. Stephen Day
The British travel to
China 2010
The British travel to
China 2011
The French travel to
China 2010
The French travel to
China 2011
German travel to
China 2010
Germay travel to
China 2011
Europeans travel to
China 2010
1 2 3 4 5 6 7 8 9 10 11 12
Europeans travel to
China 2011
Data Source: National Tourism Administration of the People’s Republic of China
December 26
In February, the number of Europeans coming to China
went to the lowest. There are two reasons, on the one hand, the
Chinese Spring Festival is in February, and on the other hand
there are some influential festivals in February in Europe, such
as the Venice Carnival and Munich’s Oktoberfest, which may
attract a large number of Europeans.
From February to April, it’s a good period to come to
China, so there are usually a lot of Europeans traveling to
China. However, there is a decline in May, which is caused by
the local festivals of Europe in May and June.
From June to August, the number of tourists will rise,
and in September the number decreases. The reason is that
most of Europeans usually have holidays in July and August,
and return to work in September.
The number of tourists will reach a new peak in October
each year, and there is a sharp decline in November and December.
This is because it is near Christmas, the most important
festival in Europe.
Clearly, the time position and duration of holidays are
very important considerations when people arrange their travels,
particularly overseas trips.
Dependent factors of the holiday
impact
Holidays have impact on China-EU
trade in goods and services, but the impact
is significantly constrained by many factors.
If some holidays are concentrated
in one month, the impact of the holidays
would be super imposed.
According to Figure 1, in January
2012, the China-EU trade dropped significantly
compared with the same period
last year because the Spring Festival
and New Year’s Day were concentrated
in January, leading to only 17 working
days in January, 4 days less than a usual
month. So the decline is very obvious in
2012.
21

Figure 3: Consumption of Chinese in Spring Festival
abroad (hundred million)
80
70
60
50
40
30
20
10
0
2010 2011 2012
Whether the economic situation is
good or bad directly determines the size
of the impact.
If the economic situation is good,
people would have a strong consumer
preference, but if the economic situation
is bad, people would have a weak customer
preference.
With the continuous development
of China’s economy, people’s income
rises, more and more Chinese choose
to travel abroad on holidays. In 2010
Spring Festival, Chinese consumption
in Europe was worth nearly 2.3 billion
Consumption of
Chinese in Spring
Festival in Europe
Consumption of
Chinese in Spring
Festival abroad
Source: Macro Teaching and Research Support System.
Yuan, 2.6 billion Yuan in 2011, and 3.3
billion Yuan in 2012 .
Economic policy leads to an inverse
seasonal growth in trade.
December is usually not a well
performed month for China’s foreign
trade, but the data shows that in December
2012, China’s import and export
registered about 366.84 billion dollars, a
year-on-year growth of 10.2%. Among
them, the rate of export growth was
14.1%. The rate of import growth was
up to 6.0%, while in the preceding 11
months it was zero. The rates of export
and import growth in December 2012
both reached a new peak. This is mainly
because of the economic policies introduced
by the government, which are
available for one year only. It stimulated
the trade enterprises to arrange a large
number of import and export orders in
the end of the year.
How to effectively promote China-
EU trade by holidays
Having holiday is a traditional
habit for people, who choose a most
suitable way to celebrate a festival regardless
of the overall economy or their
income, but the way people choose
could be influenced by a variety of factors.
If we could create good conditions
for people, it will effectively promote
bilateral trade.
With the deepening of political
mutual trust, China and the EU should
relax the restrictions on inbound and
outbound tourism, reduce the visa requirements,
simplify the procedures, and
create convenient conditions for holiday
tourism. In addition, we should improve
the quality of tourism services, to let
holidays always play an active role in bilateral
trade.
Study the different holiday demand
of the Chinese and the Europeans, analyze
consumer psychology, and find out
market segmentation.
Enterprises in China and the EU
should strengthen economic ties between
the consumer and holiday and
produce a variety of high-quality products
to meet the needs of consumers.
Look for new trade opportunity, stimulate
the potential of holiday trade.
China should optimize the structure
of export products to Europe, accelerate
industrial upgrading and improve
product quality.
China-EU trade frictions mostly
concentrate in labor-intensive industries,
where China has a comparative
advantage. China’s export products to
Europe are mostly cheap, which occupy
a large share of European market.
Of course it easily results in trade friction,
which may be harmful to bilateral
trade.
(Authors: from School of Economics
and Business Administration,
Beijing Normal University)
22

Higher, Broader, Deeper
ECONOMY
By Kelvin Lau, Becky Liu
RGI rebound signals the likely resumption of long-term uptrend
London narrows the gap with Singapore as the offshore pie expands
We see better CNH liquidity in 2013, leaning against even bigger drainage under the capital account
Our RGI resumes its
uptrend in tandem with
rising market confidence in
China’s recovery and CNY
appreciation.
Higher RGI, broader reach and a
deeper liquidity pool
The Standard Chartered Renminbi
Globalisation Index (RGI) rebounded and
hit a new high of 737 in November, up from
a revised 731 in October (see Figure 1). The
RGI is a comprehensive index that measures
the internationalisation of the offshore Renminbi
(CNH) across markets and geographies.
The improvement in November was
broad-based. We expect growth to continue,
driven by recovering confidence in China’s
economy and CNY appreciation, the continued
expansion of the Renminbi’s global
reach (especially via Renminbi invoicing),
and further policy support.
CNH deposits in Hong Kong
increased in November, driven by stronger
net outflows from the mainland via
cross-border Renminbi trade settlement.
The return and broadening of the CNH
spot premium over CNY likely pushed
onshore firms to make Renminbi trade
payments to – and convert them in – the
offshore market. However, comments
by China Securities and Regulatory
Commission Chairman Guo Shuqing
that the R-QFII quota may be expanded
as much as 10 times are a timely
reminder that the magnitude of net
outflows to China under the capital account
still holds the key to longer-term
CNH deposit growth. We expect total
Figure 1: The RGI has grown more than seven-fold since December 2010
Note 1: An index base of 100 was set for Dec-2010, initially covering Hong Kong only
Note 2: Singapore and London became Eligible Markets and were added to the RGI in Aug-2012
Note 3: Brief pauses in the RGI uptrend in Q4-2011 and Q1-2012 reflect a period of caution and
market consolidation following late Q3-2011 market turbulence triggered by global risk aversion
Source: Standard Chartered Research
23

ECONOMY
CNH deposits in Hong Kong to grow
to at least CNY 700bn by end-2013.
CNH market growth resumes
Three of the RGI’s four constituent
parts grew over the month of November:
Dim Sum bonds and CDs
outstanding, offshore deposits outstanding,
and trade settlement and other
international payments. We believe the
structural rise in Renminbi settlement
of China’s trade (Figure 2) will continue
in 2013. The resumption of CNY
appreciation expectations will help to
preserve the prevailing CNH premium
over the CNY spot price and attract
more Renminbi to leave China under
the current account and be sold offshore.
The resulting boost to offshore liquidity
should support further CNH asset
growth. CNH FX turnover (the fourth
constituent of our index) in Hong Kong
and Singapore trended sideways for
most of H2-2012, but has picked up
over the past few weeks.
The three markets currently included
in our RGI are Hong Kong,
London and Singapore. Figure 3
shows that London is leading the way
among the emerging offshore centres
for Renminbi-denominated SWIFT
payments to and from mainland China
and Hong Kong. This trend has allowed
London to close the overall RGI gap
with Singapore: excluding Dim Sum
bonds (which are global in nature and
should not be associated with a particular
location), the ratio of the relative
sizes of the Hong Kong, Singapore and
London offshore Renminbi markets
is now 78:11:11. European corporates
have made significant progress in using
the Renminbi, a message that came
through loud and clear in our inaugural
Offshore Renminbi Corporate Survey
in October-November 2012.
Apart from the big three centres,
the offshore Renminbi market is
expanding globally to other locations.
Taipei has also seen a steady rise in
both Renminbi deposits and crossborder
payments with mainland China
and Hong Kong. The numbers have
yet to reflect the recent activation of its
Renminbi clearing capabilities and the
opening up of Renminbi business to
its Domestic Banking Units (DBUs).
Taiwan’s entrenched trade links with
mainland China and its substantial
pent-up demand for retail Renminbi
services make it a top candidate for RGI
inclusion sometime this year. Located
between London and Taipei, Dubai is
another potential RGI candidate as it
re-focuses on its role as a regional hub
for trading, logistics and tourism. The
wholesale re-denomination of the oil
trade into CNY is likely still a long way
off, but that will not stop the conversion
of China-Middle East and China-Africa
trade in manufactured and capital
goods re-exported via Dubai.
The many moving parts of CNH
deposits
Of our four RGI parameters,
The global CNH pie
will only get bigger
as new financial
centres join in.
Figure 2: More than a cyclical story
China’s CNY trade settlement, CNY bn and %
Figure 3: SWIFT RMB payment value, selected countries
Total sent/received with China and Hong Kong (CNY bn)
Sources: PBoC, Bloomberg, Standard Chartered Research
Sources: SWIFT, Standard Chartered Research
24

CNH deposits have always been
the toughest to predict because of
the many moving parts involved.
Offshore liquidity conditions were
tightening for most of 2012. At one
stage, CNH deposits in Hong Kong
were down 13% from their 2011
peak, although the fall was cushioned
as banks raised time-deposit rates to
near or above 3% to attract deposits.
The start of 2013 has seen a sharp
improvement in local CNH liquidity
conditions; this has caused the overnight
deposit rate to collapse to 0.7%
from 2.5% as of December 2012, and
1Y CCS to fall to 2.1% from 2.6%
(Figure 4). Hong Kong commercial
banks CNH time-deposit rates were
generally down by around 10-30bps
across most tenors in the first week of
January.
So what has changed? For
one, monetary conditions in China’s
onshore market eased as a result of
frequent PBoC injections, as well as
a resumption of net capital inflows in
November-December. China’s overnight
interbank repo rate fell to 2% in
January from 2.3-2.5% in December.
Offshore liquidity has also been
boosted by the November return
of the CNH premium over CNY,
which became stickier in December.
A stronger CNH spot rate over
CNY makes foreign exporters more
Figure 4: A bout of flush liquidity at the start of 2013
O/N Renminbi HIBOR and 1Y CCS collapsed to 0.7% and 1.9% (%)
Sources: Bloomberg, Standard Chartered Research
willing to receive Renminbi directly,
and foreign importers will convert
at the CNY spot rate (rather than
CNH spot) via the offshore clearing
bank – i.e., their payments to onshore
will not reduce CNH liquidity
in this case. Chinese importers
should also have a greater incentive
to make cross-border (trade-related)
Renminbi transfers to their offshore
purchasing arms before doing USD
conversion. Such trade settlement
practices may prevent a substantial
widening of the CNH premium,
but we believe a small premium on
the back of mild CNY appreciation
expectations and China’s economic
recovery is sustainable for most of
2013. Chances are that the ratio of
China’s imports to exports settled
in Renminbi will finally start to stabilise
around the Q3-2012 level of
1.2:1:0, after falling consistently since
the launch of the Renminbi trade
settlement pilot scheme in 2009.
Notwithstanding the risk of a
small setback in February – onshore
liquidity typically tightens before the
Lunar New Year (10 February this
year), and redemption of CNH CDs
is particularly strong in February – we
still expect bigger Renminbi inflows
via trade settlement to the offshore
market in 2013 than in 2012. This
will help to balance Renminbi outflows
to the mainland under the
capital account, which are likely to
remain large.
In 2012, combined capital
account outflows from Renminbi
foreign direct investment (FDI),
overseas direct investment (ODI)
and R-QFII drained Hong
Kong’s CNH liquidity pool by
some CNY 260bn, or 45% of
Hong Kong CNH deposits (which
stood at CNY 571bn as of November).
We expect at least CNY
300bn to flow back to mainland
China in 2013, driven by Beijing’s
recent initiatives on cross-border
capital activities, Renminbi FDI,
R-QFII (for which the quota was
significantly expanded recently),
and the Qianhai cross-border
loan programme.
To balance these CNH outflows,
Beijing is under pressure to
allow more capital account CNY
outf lows from China. News of
QDII2, a pilot programme allowing
mainland individuals to invest
overseas utilising onshore funding,
is encouraging, as the same
framework could eventually be
used for a Renminbi-denominated
programme (perhaps R-QDII2).
According to the People’s Bank
of China statement on its annual
work meeting, it has been “proactively”
preparing for the QDII2
scheme, which is likely to be
launched this year. Overseas direct
investment flows will also build in
2013, and a growing share of them
will be denominated in CNY.
Overall, though, we believe rising
CNY inflows to Hong Kong under
the current account will more than
offset rising outflows under the
capital account, resulting in more
liquidity.
CNH deposits of at least
CNY 700bn in Hong Kong by
end-2013 appear reasonable to us
for now; we see a strong case for
CNY 750-800bn, if there is further
capital account liberalisation.
We also look for the RGI to rise
more than 50% this year.
(Authors: from Standard
Chartered Bank)
25

ECONOMY
When Exchange-rate Volatility
Affects Trade
By Jérôme Héricourt, Sandra Poncet
The increasing volatility of
exchange rates after the fall
of the Bretton Woods agreements
has been a constant
source of concern for both policymakers
and academics. Developed countries
fought hard in the 1980s to limit US
dollar fluctuation (one thinks of the Plaza
and Louvre’s agreements, respectively
in 1985 and 1987), and some European
countries took an even more radical
decision by giving up their national currency
for the euro in 1999.
The underlying intuition is simple:
exchange-rate risk increases transaction
costs and reduces the gains to
international trade. Surprisingly, macroeconomic
evidence of the effect of
exchange-rate volatility on trade, and
more generally on growth, has been
quite mixed, pointing to very small or
insignificant effects. In that context, it
seems quite puzzling to see a number
of countries, especially the emerging
economies, adopting more or less fixed
exchange-rate systems, especially when
one remembers the painful collapses of
south-east Asian fixed pegs or of the
Argentinian currency board at the turn
of the century.
However, more recent work has
emphasised that these results could be
due both to an aggregation bias and an
excessive focus on richer countries with
highly developed financial markets,
since much more substantial negative
effects of the exchange-rate volatility on
trade and growth are found for developing
countries. This column provides
support for both claims, arguing that
there is indeed a negative impact of
26
exchange-rate volatility on firms’ exporting
behaviour, magnified for financially
vulnerable firms, and dampened
by financial development.
Exchange-rate volatility,
financial dependence and firmlevel
trade
Several mechanisms can generate
a negative impact of exchange-rate volatility
on trade, proportionally stronger
for financially vulnerable firms – and
consequently weaker with high levels of
financial development. One can think
of exchange-rate risk, which creates uncertainty
for the exporter’s earnings. The
existence of well-developed financial
markets should allow agents to hedge
exchange-rate risk, thus dampening or
eliminating its negative effects on trade.
But this effect is not clearly established,
either empirically or theoretically. In
that sense, mitigation of exchange-rate
risk is unlikely to be the main sources of
the growth-enhancing effect of financial
development found in the literature.
Keeping in mind that sunk costs
of exports are similar to investments
in intangible capital, such research and
development, and that exchange-rate
movements also give rise to sunk costs,
the negative impact of exchange-rate
volatility on exports can be rationalised
through the asymmetry of adjustment
costs leading to investment irreversibility.
Fixed start-up costs for entering the
export market include costs of gathering
information on foreign markets, establishing
a distribution system and, more
generally, adapting products to foreign
tastes and environments. When facing
a real depreciation of its own currency,

the current earnings of a firm rise. The
firm may use this additional income
to fund the sunk costs of entering new
markets. But once these investments are
made, it will be very difficult, and most
of the time impossible, to back out and
recover the cost of those investments
even in the case of an abrupt subsequent
currency appreciation. If firms are credit
constrained, they will face additional
difficulties to fund new investments,
and will be even more reluctant to take
the chance of engaging in exports to
markets characterised by highly volatile
exchange rates.
Lessons from China
In our recent paper, we find support
for this kind of mechanism using
a panel of Chinese firms. In this study,
we investigate both the impact of real
exchange-rate volatility on the exporting
behaviour and the way financial
constraints, together with financial
development, shape this relationship at
the firm level. Our empirical estimations
rely on export data for more than
100,000 Chinese exporters over the
period 2000-06. We have access to
information on firms’ foreign sales as
well as on the structure of their exports,
including the products and destinations
they serve. We also infer firm-level financial
vulnerability from the financial
dependence of their activities. Using
this detailed information, we identify
the impact of exchange-rate volatility
(defined as the yearly standard deviation
of monthly log differences in the real
exchange rate, the latter being computed
as the ratio of nominal exchange rate
of the yuan with respect to the partner’s
currency divided by the partner’s price
level) on different measures of intensive
and extensive margins, depending on
the level of financial constraints.
We find that that firms tend to
export less and fewer products to destinations
with higher exchange-rate
volatility. It also appears that the magnitude
of this export-deterring effect
depends on the extent of firms’ financial
vulnerability. To illustrate these results,
we can compare the reduction in the
export performance due to real-exchange-rate
volatility for strongly and
weakly credit-constrained firms. Regarding
the strongly constrained firms,
our results suggest that a two percentage
point (i.e. one standard deviation)
increase in yearly real-exchange-rate
volatility would reduce the export value
by 3%, and the number of exported
products by 0.85%. The effect is lower,
but still present, for weakly constrained
firms: for them, the same 2% increase
in yearly real-exchange-rate volatility
cuts the export value by 0.24%, and the
number of exported products by 0.07%.
Tough non-negligible, the effects appear
therefore quantitatively less important
for the extensive margin of trade than
for the intensive margin.
Mitigating role of financial
development
We subsequently exploit Chinese
cross-provincial heterogeneity to study
how financial development (measured as
the share of total credit over GDP in the
province) may mitigate both credit constraints
and exchange-rate volatility. We
do find that financial development directly
(that is, independently of the level
of financial dependence) dampens the
negative impact of real-exchange-rate
volatility, but our results also point to
an even stronger relaxation effect when
sectoral financial dependence increases,
especially on the intensive margin of export.
Quantitatively, this second type of
effect is much stronger than the direct
one, with a range from one to ten.
These results are directly in line
with recent macroeconomic literature
emphasising that financial development
tends to reduce the impact of exchangerate
volatility on economic performance.
Doing so, we provide a microfounded
investigation of this effect, and propose
a potential channel for it (through exports).
Policy implications
Our results emphasise that the
magnitude of the negative impact of
real-exchange-rate volatility depends
mainly on the extent of financial
constraints, and therefore, on the level
of financial development. These findings
in the Chinese context are especially
interesting, because China appears as a
typical case for analysing issues raised
by exchange-rate volatility for developing
countries. First, as the country is
progressively giving up its relatively rigid
exchange-rate system, the exchange-rate
volatility is expected to substantially rise
in the future, due to progressive removal
of trading restrictions on the yuan, with
a goal of having a basically convertible
currency by 2015. Second, the export
rate is particularly high related to the
economic size of China, leading to substantial
exposure to exchange-rate fluctuations.
Finally, the high heterogeneity
in terms of both (regional) financial
development and (sectoral) financial
dependence enlightens that credit constraints
are key in determining to what
extent the exchange-rate volatility will
be harmful to trade.
General lessons
There are a couple of lessons to
draw from our research:
The development of credit markets
is crucial to help firms to overcome the
additional export sunk cost related to
real-exchange-rate volatility.
Better access to external finance
would support the expansion of firms’
exports, particularly to those destinations
characterised by real-exchange
rate-related uncertainty.
More generally, our study emphasises
that emerging countries should be
careful when relaxing their exchangerate
regime.
Hard fixed pegs for developing
countries are certainly not always a
panacea, but moving to a fully floating
regime without the adequate level of
financial development could also prove
to be very hazardous for trade performance.
(VoxEU)
(Authors: Jérôme Héricourt,
Assistant Professor at EQUIPPE,
University of Lille; Sandra Poncet,
Professor at the University of Paris I
and scientific advisor at CEPII)
27

ECONOMY
Data Watch on China’s Foreign Trade
and Investment in 2012
Shen Danyang, Spokesman of the Ministry of Commerce of China
China’s foreign trade in 2012
According to statistics of the Customs, China’s exports and imports
in the year of 2012 reached $3.86676 trillion, up by 6.2% over
the same period of last year. Specifically, exports stood at $2.04893
trillion, up by 7.9% year on year; imports $1.81783 trillion, up by 4.3%.
The twelve months saw a trade surplus of $231.1 billion, increasing by
48.1%. Four obvious features are as follows:
Steady increase in trade with important partners including
the United States and ASEAN.
In 2012, China’s bilateral trade with the United States reported
8.5% increase over 2011, 10.2% increase with ASEAN,
11.2% increase with Russia, and 1.8% increase with Brazil. While
the bilateral trade with the EU and Japan decreased 3.7% and 3.9%
respectively.
Continuing significant increase in exports of Central and
Western China.
During the whole year of 2012, the exports in Central China
rose 21.8% and that in Western China increased 37.8%. The exports
in Chongqing, Anhui, Henan and Sichuan Provinces increased by
94.5%, 56.6%, 54.3% and 32.5% respectively. The increasing rate in
Eastern China was 5%, in which the exports in Guangdong, Jiangsu,
Zhejiang and Shandong Provinces rose
by 7.9%, 5.1%, 3.8% and 2.4% respectively.
Steady increase in the expansion
rate of exports and imports under the
general trade.
In 2012, China’s general trade
value was $2.00983 trillion, up by 4.4%
year on year, in which exports value
increased by 7.7% to $988.01 billion,
while imports value increased by 1.4%
to $1.02182 trillion. The processing
trade still witnessed a sluggish growth.
The total value of processing trade
was $1.34395 trillion, up by 3%, in
which the exports value rose by 3.3% to
$862.78 billion, while the imports value
increased 2.4% to $481.17 billion.
Steady increase in exports of
mechanical and electrical products, as
well as labor-intensive products.
In the year of 2012, China exported
$1.17942 trillion worth of mechanical
and electrical products, 8.7% higher
than that of last year, 0.8 percentage
points higher than the growth rate of
the nation’s total exports over the same
period. The total exports value of seven
kinds of labor-intensive products including
textile, apparel, shoes, luggage,
plastics, furniture and toys increased
by 8.6%, and the total amount reached
$418.89 billion. The imports of energyand
resource-related products saw significant
increases in 2012, in which 8.4%
increase for iron ore, 6.8% for crude oil,
29.8% for coal, and 11.2% for soybeans.
Utilization of foreign
investment
In 2012, China approved the
establishment of 24,925 new foreigninvested
enterprises in non-financial
28

fields, a decline of 10.1% on the previous
year. China utilized $111.72 billion
worth of foreign capital, a decline of
3.7% from 2011. In December alone,
the number of newly-set-up foreigninvested
enterprises was 2,422, down
by 7.8%, and the sum of foreign capital
utilization was $11.70 billion, down by
4.5% (excluding the data of banks, securities
and the insurance industry). The
features are as follows:
Continuing faster increase of
foreign capital utilization in service
industries than in the manufacturing
industries due to the industrial structure
optimization.
In 2012, the service industry made
an actual use of $53.84 billion in foreign
investment, a decline of 2.6% over 2011,
and accounted for 48.2% of the national
total. It was 4.5 percentage points higher
than the manufacturing industry. The
service industries witnessed a continuous
optimization of related fields. The
utilization of foreign investment in real
estate was down by 10.3%, while the
rest of service industries saw an increase
of 4.8%. The following industries witnessed
relatively faster increase rates in
the utilization of foreign investment,
that is, distribution (10.9%), computer
applications (12.3%), and financial services
(11.0%). The sectors of agriculture,
forestry, animal husbandry, and fisheries
made an actual use of $2.06 billion in
foreign investment, an increase of 2.7%
year on year, accounting for 1.9% of the
country’s total utilization of foreign capital.
The manufacturing industry made
an actual use of $48.87 billion in foreign
investment, a decrease of 6.2% year on
year, accounting for 43.7% of the country’s
total utilization of foreign capital,
which was 1.2 percentage points lower
over 2011. In specific, several high-end
manufacturing industries saw relatively
faster growth rates, and those of general
equipment manufacturing industry and
transport equipment manufacturing
industry were 31.8% and 17.2% respectively.
Steady increase in the foreign
investment from several developed
countries like the US and Japan.
During the year of 2012, the
investment from the US was $3.13
billion, 4.5% up year on year, and that from Japan increased by
16.3% to $7.38 billion. The paid-in capital from 27 countries in
EU was $6.11 billion, dropped by 3.8%, in which that of German
rose by 29.5% to $1.47 billion, and that of Holland and Switzerland
increased by 49.1% and 58.1% respectively, with relatively
faster speeds. The amount of paid-in capital in China from ten
Asia nations and regions (Hong Kong, Macau, Taiwan, Japan,
the Philippines, Thailand, Malaysia, Singapore, Indonesia, and
South Korea) reached $95.74 billion, down by 4.8%.
Continuing significant increase in paid-in foreign capital to
Central China.
From January to December in 2012, the central regions made
an actual use of $9.29 billion, an increase of 18.5%, and accounted for
8.3% of the national total. The eastern regions made an actual use of
$92.51 billion in foreign investment, an increase of 4.2% year on year
and accounted for 82.8% of the national total. The western regions
made an actual use of $9.92 billion in foreign investment, a decline of
14.3% year on year and accounted for 8.9% of the national total.
Overseas investment and economic cooperation
China’s outbound FDI.
In the whole year of 2012, China’s domestic investors invested
directly in 4,425 overseas corporations in 141 nations and regions,
with a total of non-financial outbound FDI of $77.22 billion, an increase
of 28.6% year on year.
The investment in Russia realized a high growth rate of 117.8%.
The investment in the US, Japan, ASEAN and Hong Kong SAR
reached a double-digit growth rate, which were 66.4%, 47.8%, 52%
and 32.9% respectively.
With regard to the investors, the local FDI increased 38.9%
to $28.19 billion, accounting for 36.5% of the total amount over the
same period. Investments from Guangdong, Shandong, Jiangsu,
Liaoning and Zhejiang Provinces were much higher than those from
other provinces.
Overseas-contracted projects.
In the year of 2012, China’s overseas-contracted projects reported
a turnover of $116.6 billion, an increase of 12.7% year on
year. $156.53 billion worth of new contracts was signed in 2012, up
by 10% year on year. There were 586 projects with a newly-signed
contract amount over $50 million, the total amount of which reached
$125.21 billion, 11.4% increase year on year.
By the end of December in 2012, China had signed a total of
$998.1 billion worth of agreements on contracting overseas projects,
and realized $655.6 billion in turnover.
Foreign labor service cooperation.
In the entire year of 2012, the number of all kinds of labor
sent abroad was 512,000, an increase of 60,000 from the
same period of last year. 233,000 of them were working on
overseas contracted projects, and 279,000 of them were for labor
cooperation. At the end of December in 2012, there were
a total of 850,000 Chinese working abroad, 38,000 more than
the same period of 2011. By the end of 2012, the total number
of all kinds of labor sent abroad was 6.39 million.
(Source: Press conference of the Ministry of Commerce of
China on January 16, 2013)
29

Industrial Watch
AGRICULTURE
China’s grain imports at a record high
Industrial Watch
According to the statistics of the Customs on January 10,
the amount of exported grain in 2012 was 2.77 million
tons, a decline of 3.8%. The import volume of soybeans
increased 11.2% and hit 58.38 million tons, the numbers of
which were 26.59 million tons, 28.24 million tons, 30.82
million tons, 37.44 million tons, 42.55 million tons, 54.80
million tons and 52.63 million tons from 2005 to 2011.
At a press conference held by Ministry of Commerce on
January 16, the spokesman Shen Danyang said, “The overall
scale of imports was obviously within a reasonable range.”
Though the amount of wheat, corn and rice China imported
from January to November in 2012 soared 294.5 percent year
on year, it still accounted for less than half of the country’s combined
annual quota for importing the three types of grain, according
to Shen.
China has set import quotas for corn, wheat and rice at 7.2
million tons, 9.64 million tons and 5.32 million tons, respectively,
for 2013, according to the National Development and
Reform Commission, the country’s top economic planner.
Analysts believed so much was imported mainly because
of the big price differences between domestic and relatively
cheaper international markets.
They said this price discrepancy was created by the government’s
minimum purchase price, which shored up domestic
grain prices while they declined on the global market due
to weak demand as a result of the sluggish economic recovery.
“The government should allow the purchase price some
flexibility to fluctuate with international market prices,” said Ma
Wenfeng, a senior analyst at Beijing Orient Agribusiness Consultant,
one of the industry’s largest specialist consultancies.
Huang Jikun, director of the Center for Chinese Agriculture
Policy at the Chinese Academy of Sciences, said the
increasing grain imports are mainly driven by domestic need
for grains for fodder and industrial use.
For instance, an increase of about 1 to 2 million tons of
corn imported from overseas markets annually will be foreseeable
in China in the next few decades, he said. Yet, there
is a potential for China to increase yields through technical
advances to promote domestic production, depending on institutional
innovation.
China recorded a grain output of more
Comment
than 589 million tons in 2012. It was
the ninth consecutive year of increased grain
harvests. Also, about 88 percent of the increase
in grain output over those nine years came from
the country’s 13 major grain-producing regions,
where industrialized agriculture produces high
yields. More advanced agricultural technology input
is needed to improve grain yields per unit.
China-Sweden oat R&D center to be established
China-Sweden
Forum on Oat
Research & Development
was convened
in China on
January 25, 2013.
Through friendly
discussion, the
Forum approved
the Proposal on
China-Sweden Oat
Research & Development
Cooperation,
and reached an agreement to establish the China-Sweden
Oat R&D Center when conditions met. The Center, which is
expected to involve participation of relevant R&D institutions
and enterprises of both sides, defined its aims as creating an
R&D platform to integrate efforts of enterprises, universities
and research institutes, and providing services to facilitate the
China-Sweden joint endeavor in oat R&D.
As the origin of naked oat (Avena nuda), China is wellknown
for its lengthy history of oat production and significant
progress in oat research and industrial development. On the
other hand, Sweden is considered as a leader worldwide in oat
seed production, molecular biotechnology and product R&D.
Therefore, the two sides decided to conduct an array of cooperative
studies on: oat germplasm development and variety breeding
upon production and processing demands; oat production
techniques and farming systems upon diversified conditions of
various localities; popular product processing technologies upon
market orientations; and practice codes and standards upon organic
or green food requirements.
In the year of 2012, Bright Food took
Comment
over Weetabix, a UK cereals maker, in
a £1.2 billion deal. All of these phenomena suggest
that Chinese people’s breakfast habits are
undergoing subtle changes, which may be a huge
potential consumer market in the near future.
However, what should not be neglected is still the
food safety.
32

Metal
China iron ore imports hit fresh high
China’s commodities imports accelerated in 2012 in volume terms in spite of
slowing growth in the overall economy, with crude oil, iron ore and copper all
reporting record high imports for last year, Financial Times said.
Data from Chinese Customs released on January 10 revealed that iron ore imports
were up 8.4 per cent, increasing at a slightly slower pace than in 2011 but still
faster than the overall economy. China’s iron ore imports last year totaled $95.6bn,
standing at 743.6m tonnes, according to customs data. Imports in December were
70.94m tonnes, hitting fresh high for one month, 5.16m tonnes more than the previous
month.
The slowdown in the Chinese construction sector, combined with sliding steel
prices during most of the year, caused iron ore prices to gyrate in 2012. However,
prices have been steadily recovering for the past four months and are at their highest
levels in more than a year, further reported by Financial Times.
Higher ore prices came amid hopes of rising demand as China accelerated approval
for major infrastructure projects to bolster economic growth.
“China had a very strong year in terms of commodities imports,” said Sijin
Cheng, commodities analyst at Barclays. However, she added, the underlying drivers
for the imports were “more complex” than in previous years because of factors
such as strategic stockpiling and speculative imports.
China iron ore imports
Million tonnes
75
70
65
60
55
50
45
40
2010 2011 2012
Source: Thomson Reuters Datastream
Comment
The reasons for rising price of iron ore recently are also “complex”. For instance, the coming
spring festival forced most enterprises to replenish stock; Christmas holiday in western
countries reduced the supply of iron ore in Chinese market. Since the price of imported iron
ore is becoming higher and higher, and the strategic stockpiling is going to an end, more and
more enterprises are less willing to import iron ore, which is expected to embrace the price
consolidation.
Major steel companies see profits surge
Statistics from the China Iron and Steel Association
showed that major Chinese steel firms returned to reporting
profits in November of 2012 after bringing a fourmonth
series of losses to an end a month earlier, according
to China Daily.
In the first 11 months of 2012, the 80 major steel
makers posted a loss of 1.97 billion yuan, Wang Qinghai,
chairman of the association, said during a meeting on January
5.
From January to November, members of the China
Iron and Steel Association saw their revenue fall by 5.37
percent year-on-year, while their loans increased by 6.58
percent and their financial costs by 24.38 percent, Wang
said.
“The asset-to-liability ratio of the member companies
had increased by about 1.64 percentage points year-on-year
to 68.67 percent by the end of November,” Wang further
introduced at the meeting.
During the trying year, the operating profit of this
China’s biggest steel maker, Baoshan Iron & Steel Co,
declined as it suffered falling gross margins due to weaker
steel demand and a high price of iron ore. The company
sold its stainless and special steel businesses. It has decided
to raise the ex-factory price for February delivery in 2013 of
its main products.
Despite the difficult times for the
Comment
industry, the majority of small steel
enterprises are still continuing to operate. As a
result, the nation’s steel output has increased
continuously in recent years, even as the growth
in demand for the metal began to slow. Though
the output numbers rise, China is actually using
less steel. Thus, analysts said the steel industry’s
profits will continue to be small for a long time.
33

Industrial Watch
ENERGY
Chinese crude oil imports rise 6.8% in 2012
Industrial Watch
China, the world’s second-largest oil consumer, imported
271 million tons of crude oil last year, a rise of 6.8 percent
year on year, as demand remained high despite an economic
slowdown, data from the General Administration
of Customs showed.
The value of the imports jumped 12.1 percent
year on year to $220.67 billion last year due to surging prices,
according to the data.
Analysts have predicted a higher reliance on imported
oil in the years to come, as China is still in a phase of rapid
urbanization and industrialization.
Crude imports are likely to reach around 285 million
tons in 2013, with the country’s crude import dependence
rate exceeding 60 percent, said Cheng Ruifeng, an analyst
at Oilgas.com.
Two-thirds of China’s oil demand will depend
on the overseas market by 2020, according to
Zhong Ren, assistant to the president of oil giant Sinopec
Group.
Saudi Arabia remains the largest oil exporter to China.
China imported 49.5mt of crude oil from Saudi Arabia in
11M12, accounting for 20% of China’s total oil imports during
the period. The top five exporters accounted for 59%
of China’s oil imports in 11M12, up from 57% in 11M11.
Although China increased reliance on major oil exporters,
China cut the oil imports from Iran by 23% in11M12 amid
oil embargo on Iran. Africa and Russia are becoming more
and more important sources of China’s overall oil consumption
given that the imports from Angola and Russia jumped
30% and 36% in 11M12 YoY, respectively.
With global monetary easing sparking
Comment
investors' purchasing demand,
crude prices are expected to go up further
in 2013, which will boost domestic inflation
and push up costs for Chinese importers.
More natural gas to warm winter China
China’s largest natural gas supplier pledged to increase its
output to meet the surging domestic demand amid the
current gas crunch caused by the colder winter.
The company has asked its major oil and gas fields to
operate at full capacity and started purchasing liquefied natural
gas (LNG) to meet the surging needs, a spokesperson
with China National Petroleum Corporation (CNPC) said.
In addition, CNPC will boost the gas import from central
Asia to address the shortage, according to the company.
The demand for natural gas has increased substantively,
driven by the continuous rain and snow that slashed north
China this winter.
In response, the authorities have urged major gas producers
to give priority to residential purposes, public facilities
and transportation.
China plans to add 3.5 trillion cubic meters of proved
conventional natural gas reserves during the 2011-2015 period,
according to a latest development plan.
The plan, compiled by the National Development and
Reform Commission(NDRC) and approved by the State
Council, also said that explorable reserves will reach around
1.9 trillion cubic meters. By 2015, China aims to bring its
natural gas supply capacity to around 176 billion cubic meters,
making the energy reachable to 250 million people, or
18 percent of the population.
Regarding the development of shale gas, a variety of
unconventional natural gas, China plans to prove 600 billion
cubic meters of geological reserves by 2015, with explorable
reserves at 200 billion, the statement said, setting the output
target of 6.5 billion cubic meters by that time.
The country also vows to “basically complete” the assessment
on China’s shale gas potentials during the 2011-
2015 period and master the key exploration techniques.
Comment
Currently, natural gas makes up only around 4.6 percent of the country's primary-energy
consumption, much lower than the international average of 23.8 percent. This leaves room
for exploration potentials as the geological reserves of China's conventional natural gas is
estimated at 52 trillion cubic meters.
34

ENVIRONMENT
China issues first greenhouse gas bulletin
Greenhouse gas emissions in China in 2011 increased to
their highest level since data began being collected by
network stations in 1990, according to China’s first Greenhouse
Gas Bulletin.
The bulletin, released by the China Meteorological Administration
(CMA), showed carbon dioxide levels measured
at 392.2 parts per million at Waliguan station in Qinghai
Province. This was a peak since the station began operating
in 1990.
The figures, revealed in Shenyang, capital of northeast
China’s Liaoning Province, are also slightly higher than the
global averages in all greenhouse gas components including
atmospheric carbon dioxide, methane and nitrous oxide.
The bulletin indicates a sign of the government’s improving
transparency in facing environmental issues, said
Duan Yihong, head of the China Meteorological Academy
of Sciences.
According to Duan, data on greenhouse gas levels in
2012 can be expected soon, as the government is determined
to publish the bulletin annually.
He said greenhouse gas emissions, which are a cause of
the persistent smog currently enveloping the north of China, are
mainly produced through burning of fossil fuel and biomass.
“In addition to industrial emissions, automobile exhausts
and coal burning for winter heating are two major
contributors to the suffocating smog,” he said.
The bulletin showed that the annual averaged greenhouse
gas emissions observed by three regional stations set
up in northeast China’s Heilongjiang Province, Beijing and
eastern Zhejiang Province are all higher than figures collected
at the Waliguan station in sparsely populated Qinghai.
The bulletin was based on data collected by seven atmospheric
background stations established and operated by
the CMA. Four of the stations have been listed in the World
Meteorological Organization’s Global Atmosphere Watch
Program directory.
Before the China stations were enlisted, the program’s
stations were mostly situated in developed countries and regions.
As one of the world’s largest emitters and its secondlargest
economy, China is playing a constructive role in pushing
forward global climate negotiations while doing its bit to
keep emissions within targets.
The bulletin is regarded as a scientifically
composed warning to Chinese
Comment
governments at all levels on the importance of
sustainable low-carbon development. China is going
on a green and low-carbon path.
Li pledges measures in fight for clean air
China will strengthen the enforcement of environmental
laws, and take other measures to tackle air pollution,
Vice-Premier Li Keqiang pledged on January 17.
“We published accurate PM2.5 data. It took a long time
for this problem to accumulate, and it will take a long time to
solve it,” he said.
“But we must act! We have to strengthen the enforcement
of environmental laws and other regulations and also
remind the public to protect themselves.”
Beijing has been shrouded in thick smog. Levels of
PM2.5 — particle matter smaller than 2.5 microns and able
to enter the lungs and even the bloodstream — passed 300
micrograms per cubic meter on January 12 in 33 of the 74
cities with systems sensitive enough to monitor the particles.
The World Health Organization considers the safe daily level
to be 25micrograms per cubic meter.
The serious air pollution in China’s cities
has aroused great concern across
Comment
the country. As many reasons contributed to
the pollution, it will take a long time for China to
tackle the problem. In this process, action speaks
louder.
35

Industrial Watch
TEXTILE
Annual dinner boosts costume rentals
Industrial Watch
With the approach of the Spring Festival, many companies
have been well-prepared for an exciting annual
dinner. Besides the regular summary statement and cheerful
dinner, wonderful performances by the employee constitute
the most eagerly anticipated gala.
To build a joyous and swinging atmosphere, many
people choose to sing or dance. The boom in clothes leasing
shops reminds people of the coming party, as well as an increasing
rent price.
“It is so many performances that maintain the operation
of my shop year after year,” said Ms. Jiang, a shop owner in
Beijing, whose shop has expanded from 42m 2 to 780m 2 during
the past several years.
Ever since the opening of the shop in the morning at
9:00am after the Christmas holiday, clients would come
forth and select favorite costumes now and then, Ms. Jiang
introduced. “The total rentals during the period from Christmas
to the Spring Festival almost account for one third of
that in the whole year,” said Ms. Jiang.
The doubled rentals for the same costume can’t be neglected
as well. Presently, the average price for costumes and
dresses ranges from 100 to 1000 yuan per day in Beijing.
It will be much lower in some second- and third-tier cities.
However, the pursuit of popular elements is similar, among
which Gangnam Style is the most typical one.
Famous for exaggerated and amusing movements, Gangnam
Style also makes the riding outfit popular. In the clothes
leasing shops, similar riding outfits are the most frequently
wanted costume. What comes second is the court dress of
Zhenhuan, a concubine in one hit Chinese TV dramas.
“We don’t need to be much concerned about the price
of rentals because what matters most is the effect of our performances,”
one consumer said.
Annual dinners, to some extent, can
Comment
be regarded as a driver to stimulate
consumptions in hotels and restaurants, leasing
of stage costumes, gift markets, etc. Related
problems may arise at the same time, such as
lower hygienic standards, poorer qualities and
higher costs.
Loopholes found in new Down and Feather Standards
Down clothes are considered the most effective cold-proof
tool in chilly winter. Nevertheless, why the price ranges
from one hundred to thousands of RMB? Are the industrial
standards fully implemented? In the course of answering the
above questions, some people found loopholes in new Down
and Feather Standards GB/T14272-2011.
According to China Feather and Down Industrial Association
(CFDIA), the new standard requires 50% minimum
to 95% maximum clusters (down clusters, nestling
down and plumules) for products labeled “DOWN”. However,
the minimum filling weight is not determined.
Besides the percentage of down and fill power, filling
weight is also of great importance in judging whether down
clothes are warm enough. For instance, according to the
international laws, the filling weight of a short down jacket
should be no less than 130g, which is not known by most
consumers, said by an analyst.
What’s more, CFDIA also pointed out that in the new
Standards, barbs from damaged and broken down caused in
mechanical production are also calculated in the down percentage,
which is not in accordance with international laws.
Such barbs will not do any harm to people’s health. But some
companies may take advantage of such loophole and adopt
cheaper man-made barbs or even chicken feathers and fibers
to deceive consumers, and such inferior filling materials have
worse cold-proof ability and may lead to some diseases like
skin allergies.
To maintain high quality, or to reduce
Comment
costs as well as conform to the standards
with loopholes, that is a question. It has
been not only a commercial issue, but a moral
one at present. To keep pace with the advanced
and mature international standards as soon as
possible is of great importance and urgency for
Chinese companies.
36

CONSUMER
Home prices rise in more Chinese cities
More Chinese cities saw home prices rise in December
month on month despite the government’s continued
firm stance on property market controls, Xinhua reported, citing
the latest data.
According to figures by the National Bureau of Statistics
(NBS), December 2012 saw 54 of a statistical pool of 70 major
Chinese cities, up from 53 in November, record higher new
home prices than a month earlier. This marked a third consecutive
month of such increases.
New home prices in eight cities declined in December,
down from 10 in November, while those in the other eight cities
were unchanged.
On a year-on-year basis, 40 cities saw rises in new home
prices in December, sharply up from 25 in November. Prices
in 26 cities dropped year on year, down from 41 in November.
The Chinese government has adopted an array of measures
like restricting third-home purchases and introducing
property tax trials to cool the runaway real estate market since
2010, which used to be the key economic driver for the country
in recent years.
However, home prices started to rebound unexpectedly
since the second half of 2012, shored up by the country’s progrowth
policies, including two consecutive interest rate cuts
and the lowering of banks’ reserve requirement ratio.
Boosted by government support, China’s economic expansion
quickened to 7.9 percent in the October-December
period last year, lifting the full-year performance to 7.8 percent
after hitting a near three year low in the third quarter, according
to NBS data.
Major property developers also filed eye-catching annual
financial reports for 2012, indicating the market has to some
extent recovered from the lackluster performance in the first
half of last year.
Poly Real Estate Group, China’s second-largest property
developer, reported that its net profits increased 28.69 percent
year on year to 8.41 billion yuan, shored up by rising sales resulting
from government efforts to stabilize economic growth.
China Vanke Co., another leading property developer,
said its transaction volume surged 16.2 percent to 141.23 billion
yuan ($22.51 billion) in 2012.
Meanwhile, as real estate developers slowed down activities,
there are warnings of shrinking supplies in the property
market.
The accelerating housing price growth
Comment
this year could pose threat to China’s
property control policies. Therefore, stricter curbs
with more targeted measures on the property sector
are needed.
Chinese tobacco firms’ tax payments surge
China’s tobacco firms paid 864.9 billion yuan ($137.7
billion) in taxes in 2012, up 15.7 percent year on year,
according to a Xinhua report.
The industry also handed over 716.6 billion yuan in
profits to the government last year, a 19-percent rise from
a year earlier, Jiang Chengkang, head of the State Tobacco
Monopoly Administration, said at a national work conference
on January 17.
Jiang said the tobacco industry is turning greener. Energy
consumption per 10,000 yuan of value-added output fell
14.8 percent year on year to 25.3 kg of standard coal in 2012.
The industry’s total chemical oxygen demand and sulfur
dioxide emissions decreased 3.7 percent and 10.9 percent
respectively from a year earlier, the official added.
The Chinese government made a public smoking ban
one of its goals in the 2011-2015 period. Some cities have
already enacted local legislation on public smoking control.
From 2006 to 2010, the combined taxes and profits
created by China’s tobacco industry jumped 139 percent to
604.5 billion yuan, with an annual growth rate of about 19
percent.
As the world’s largest tobacco-producing
and -consuming country, China is
Comment
considering the country’s first national tobacco
control law, in the hope of controling the dangers
of smoking.
37

Industrial Watch
FINANCE
Stocks up on bullish China and US figures
Industrial Watch
The Shanghai Composite Index rose 1.41 percent to 2317
points on January 18, hovering above the 2300 level for
four days in a row, after China and the United States released
bullish economic data, reported by China Daily.
The increase was driven by the release of China’s 2012
GDP data, real estate news from Shenzhen and supportive
economic figures from the US.
China’s GDP growth was 7.8 percent in 2012, above
analysts’ expectation of 7.5 percent.
GDP increased 7.9 percent in the fourth quarter of 2012 —
ending a seven-quarter decline — and up from 7.4 percent in the
third quarter and 7.6 percent in the second quarter.
The government said that industrial production increased
10.3 percent year-on-year in December 2012, while retail sales
were up 15.2 percent year-on-year the same month.
Tomomichi Akuta, an analyst at Mitsubishi UFJ Research
and Consulting in Tokyo, said the figures confirm the
view that China will not see a hard landing, and that it can
resume sustainable growth between 7 and 8 percent.
Asian stock markets may also see gains on the back of
China’s GDP data, the analyst said.
Meanwhile, the real estate sector gained 3.18 percent in
the afternoon trading on news that a property development
plan in Shenzhen - a
major business hub in
South China — has
been approved by the
Ministry of Land and
Resources.
The Shenzhen
stock index rose 1.32
percent to 9432.3, while
the Hang Seng China
Enterprises Index of
mainland companies traded in Hong Kong rose 2.09 percent,
closing at 12105.71 points.
The market was also supported by US government data
on housing starts and the unemployment rate. Analysts said
the US figures showed a continued, although slow, recovery.
The data helped confirm the view that
Comment
China is recovering from the economic
slowdown seen last summer, and is good news for
the Chinese stock market. The Chinese economy
will be more stable in 2013 than it was last year.
HK to expand offshore RMB business
Hong Kong Chief Executive CY Leung said
on January 16 that Hong Kong will consolidate
and expand offshore renminbi business,
especially in the areas of cross-border RMB trade
settlement, and issuance of offshore RMB bonds
and securities products, reported by Xinhua.
Delivering his first policy address, Leung
noted that Hong Kong has become the largest
and most liquid RMB business center outside the
Chinese mainland.
Leung said the national 12th Five-Year Plan
specifically states the central government is supporting
Hong Kong’s development as an offshore
RMB business center and an international asset management
center.
Besides, Hong Hong has played a leading role as the asset
management center in the Asia-Pacific region. Leung said
Hong Kong will strive to keep the competitive edge and develop
into a more comprehensive fund and asset management center.
“While consolidating our traditional strengths, such as
providing a platform for initial public offerings, we will also
look out for new growth areas, one of which is the development
of the commodity futures market”, according to Leung.
Leung said Hong Kong is also set to play a crucial role
in the internationalization of the mainland’s commodity
futures market, given the mainland’s huge
demand for commodities and the gradual internationalization
of its commodity futures trade.
“In order to achieve these targets, I will establish
the FSDC as proposed in my manifesto
immediately,” Leung said.
The Financial Services Development Council
will provide a high-level and effective platform
for stakeholders to explore ways to complement
the internationalization of the financial market of
China, and help facilitate the further development
of Hong Kong’s financial services industry.
The policy address is an annual address by the chief executive
of the Hong Kong Special Administrative Region.
Leung was elected the third chief executive of the HK-
SAR in March 2012 and came into office in July the same
year. A full term is five years.
Under “One Country, Two Systems”,
Comment
Hong Kong is an ideal testing ground
for steady market reforms of the country’s interest
rate and exchange rate regimes and its gradual realization
of the RMB capital account convertibility.
38

TRANSPORTATION
More Choices for
Online Consumers
in China
By Audrey Guo
On January 5, 2013, Singapore
Airlines and Ctrip.
com agreed to leverage
their respective strengths
to offer Chinese online consumers
more choices and greater value in international
travel. The two companies
will seek opportunities to develop new
overseas destinations, create focused
marketing campaigns and tailor exciting
new products to meet the rapidly
evolving demand of Chinese online
consumers.
These actions will help introduce
China’s rapidly expanding pool of online
shoppers to the Singapore Airlines
Group network of 97 international
destinations, as well as its world class
travel products and services. Chinese
online consumers will further benefit
from the gradual introduction of exciting
new destinations that will stem
from these developments, including
those offered by Singapore Airlines’
regional wing, SilkAir.
Chia Chow Hwee General Manager
in China of Singaport Airlines
said:“Singapore Airlines has been
committed to the Chinese market for
27 years and we are constantly looking
for new ways to serve our customers
better. With Ctrip, China’s largest online
travel platform, we will be able to
offer Chinese online consumers even
more choices and value for international
air travel. We will also be able
to provide the online public with more
options for premium travel from China
to new and exciting destinations in our
network, offering a top-rate, service
oriented travel experience.”
Vice President and General Manager
of Ticketing of Ctrip.com Li Xiaoping
said, “Ctrip is committed to providing
innovative travel products and services to
over 60 million registered members, with
the Perfecting Service initiatives. We are
happy and excited to offer our customers
greater international travel options with
one of the most respected and innovative
airlines in the world.”
Mr. Li added, “Along with wellreputed
and high-quality signature
products, Singapore Airlines’ renowned
service standards fit well with
Ctrip’s strong commitment to Perfecting
Service. Due to the rapid growth
and maturity of the travel market, we
expect Chinese consumers to place
greater emphasis on service standards,
quality product choices and value. We
will now be in a better position to meet
these rising aspirations and demands.”
Singapore Airlines and Ctrip.com
will introduce a wide variety of quality
online travel products, offering Chinese
online consumers more choices and a
greater value in international travel.
Singapore Airlines operates a
modern passenger fleet of more than
100 aircraft and its network, including
Singapore Airlines Cargo and SilkAir
destinations, covering a total of 105
destinations in 39 countries. In September
2012, Singapore Airlines announced
a series of investment plans to
upgrade its cabin products and services
with the intention of enhancing the
travel experience for its customers. In
addition, over the next five years, Singapore
Airlines will invest more than
SGD20 million to refine its SilverKris
Lounges.
As China’s leading travel service
enterprise, Ctrip provides over
60 million registered members with
comprehensive services including hotel
reservations, flight ticketing, packaged
tours and corporate travel management.
In addition, both business and leisure
travelers who hold Ctrip memberships
enjoy access to travel information and
special discounts from preferred businesses
throughout China.
39

Industrial Watch
ICT
Industrial Watch
The Future of Connected Cars
By Cui Xiaoling
In the same way as the smartphone
was changed forever by the arrival
of the app, car manufacturers are
now betting on these small pieces
of software to drive the future of the
automobile, according to a report by
BBC.
“We already see many cars that
have Google onboard, and Facebook
and Bloomberg updates,” says Sven
Beiker, the executive director for the
center for automotive research at Stanford
University in the US.
But, he adds, apps could soon go
a lot further than just letting you find
your favourite music or communicating
with your friends. By tapping into
the mass of data your car produces,
combined with the huge computing resources
available on the web, apps could
help save you – and everyone around
you – fuel, time and money.
And this is not a distant dream,
he says. The groundwork for the fully
connected car is being laid down now and
could be with us sooner than you think.
“Car talk”
Several manufacturers including
Ford, BMW, Mercedes, Audi, Honda
and Volvo already offer basic connected
car systems that allow a vehicle to hook
up to the web through mobile phone
networks. They act as a portal to the net,
but also provide practical benefits such as
alerting the driver to collisions, or delays
on the road ahead, and automatically
finding new routes to avoid them.
At the moment, these tend to be
the preserve of top-end vehicles. But
that too is changing. According to
research firm ABI Research, 60.1%
of cars will be connected to the web
by 2017, whilst in Europe and North
America, the figure will be closer to
80%. Soon, cars without connectivity
will be a rarity rather than the other
way around.
One of the pioneering systems for
in-car tech is Ford’s Sync, which connects
your smartphone and MP3 player
to the car’s dashboard. It allows drivers
to make telephone calls and control the
car’s radio using their voice, amongst
other things. It was developed with
software giant Microsoft and was first
released in 2007.
Like most of today’s systems, the
software is essentially a way of connecting
the car to your smartphone. But, in
2010, Ford made the first steps towards
blurring the boundaries between the
mobile and the automobile when it released
the Ford Sync API (application
programming interface). This piece of
code allowed trusted third-party developers
to tap into Sync so that they could
write apps that could work with – and be
controlled by – the system. One of the
first was the internet radio app Pandora.
It is a model that is now used by
several other manufacturers. For example,
BMW announced that it would
allow vetted third-party apps developed
for Google’s Android phone software to
work with its Connected Drive system.
But developments like this are just
the start, according to Beiker. Modern
cars are incredibly sophisticated, he
says, with up to 80 different computer
control units that monitor everything
from engine performance and braking,
to direction of travel, velocity and road
conditions. At the moment cars tend
to keep this information to themselves.
Sharing it could open up a whole new
world of possibilities.
“We are talking about changing
the car’s character from being introverted
to being extroverted. So the car
is just more talkative,” he says.
To make this a reality requires
40

at least two important things to happen.
First, car manufacturers need to make the
data from their cars available, ideally in a
standard format. And secondly, the data
needs to be easily shared.
The first of these problems is again
being tackled by manufacturers like Ford.
Working with New York City-based developers
Bug Labs, the car manufacturer
has released a prototype system called
OpenXC. Drivers install a small piece of
hardware in their car which taps into the
vehicles sensors and control units and spits
them out in a format that can be read by
compatible apps on Android.
One of the first was created by India’s
HCL Technologies and allows a driver to
automatically update select contacts with
his or her location. The idea is
that by monitoring location and
speed data from the vehicle, the
app can determine if the driver
will be late for a meeting and
can then send an email or text
message without any driver intervention.
“Always on”
Assuming that an acceptable
solution can be found, the
second part of the puzzle that
needs to fall into place is how
data is shared. At the moment,
most manufacturers use proprietary
computer systems, meaning
that data produced by one car
manufacturer is basically of little
use to another. This becomes
problematic for third-party app
developers who would need to
rewrite their code for each and
every producer. But Beiker says that could
soon change.
One project attempting to solve the
problem is the EU-sponsored Cooperatives
Vehicle Infrastructure Systems project,
which aims to develop a “universal communications
module” that can read data
from any vehicle. The project has already
published the architecture of the system it
hopes to use.
It envisages that data would be channelled
in two ways: to other cars and over
mobile connections and DSRC (dedicated
short-range communications) networks – a
wi-fi like technology that is currently used for
electronic road toll connection, for example.
Car-to-car communication could be useful
Car-to-car
communication
could be useful in
safety systems, for
example, allowing a
car to prevent a driver
pulling out of a blind
junction if another
vehicle is approaching
or forming the basis
of a peer-to-peer
collision warning
system to spot and
advise about hazards
on the road ahead.
in safety systems, for example, allowing a car to prevent a driver pulling
out of a blind junction if another vehicle is approaching or forming
the basis of a peer-to-peer collision warning system to spot and advise
about hazards on the road ahead.
Obvious applications include streaming entertainment apps and
software that can tap into the speed and direction of travel of a car to
“crowdsource” traffic updates. This would benefit the driver by giving
them personalised driving information, but would also allow the
road network as a whole to become more intelligent, allowing traffic
control systems to route cars around accidents, or divert traffic around
congested areas. Further down the line, these systems could tap into a
cars emissions data to allow pollution credit trading in real time, or automatically
reserve parking spaces by calculating when you will arrive
at your location.
Hack attack
An always-on connection – coupled with a standardised, machinereadable
data format – raises intriguing possibilities, such as allowing vehicles
to tap into the “cloud” – the vast amount of computing
power available on the web. This could create a host of powerful,
smarter apps. For example, in 2011, Ford announced a
deal with the search giant Google to use the firm’s prediction
algorithms to spot trends in large data sets. Ford’s idea would
send a car’s information to Google’s data centres. Over time,
the algorithms would begin to predict where you are driving
to every time you sit in the driver’s seat, depending on the
time of day and your usual driving habits. This would allow
it to determine the most fuel-efficient journey, with the best
driving conditions and the least traffic.
Of course, as more and more cars begin to stream
their telemetry, mobile networks could become overloaded.
Fourth-generation cellphone systems will help, and
there are already various initiatives, such as the NG Connected
car programme and the 4G Venture Forum for
Connected Cars, that aim to accelerate this technology.
But the rise of the cloud-based app will could also spur
the development of other clever connections with plenty
of bandwidth.
One idea is to use wi-fi. A system proposed recently
by researchers from MIT, Georgetown University and the
National University of Singapore showed how a fleet of wifi
enabled cars could share limited wi-fi connections by shuffling data
between them all, and using a select few cars to collect everyone’s data
and upload it when it finds a hotspot. The system is theoretical at the
moment, but it gives an indication of the kind of technology that could
begin to hit cars in the future.
Another problem that will need to be solved is security. Researchers
have already demonstrated that control systems in cars are vulnerable
to attack. But once data from those critical systems – like brakes
and engines – is being streamed, read and processed on the net for real,
it will be even more crucial to ensure it cannot be subverted by hackers.
However, if the history of smartphone apps is anything to go by,
this kind of obstacle will not hold the technology back. Just four years
ago smartphone app stores barely existed. Today, they serve up millions
of apps and billions of downloads.
Time will tell whether adding the 80 or so million cars that are
produced every year into the mix will shift it up a gear or stall on the
driveway.
41

Industrial Watch
HEALTH
Industrial Watch
Why Elderly Tend to Splurge
on Health Product?
By Chen Xin
A
survey finds out that although
the majority of the
elderly in China usually live
a thrifty life, they tend to
splurge on health products. Unfortunately,
this excessive spending is wasted
as a result of misleading marketing and
sales tactics. Why are senior citizens so
fond of buying health products and why
are they easily cheated?
Empty nesters
The new phenomenon of “empty
nesters” in China may shine light on
the answer.
Nowadays, many elderly do not
live with their children. Economic
movement has caused many in the
working force to move far from home
leaving behind parents and extended
family. This change in society has left
many elderly without comfort of their
family, which makes them vulnerable
to friendly enthusiastic sales people.
When grandma or grandpa buy health
products, they not only get the products,
but also receive a type of surrogate
family of sorts.
The promotion of health products
is not only focused on boasting its functions
that attract the elderly, but also
based on caring for them while selling
the products, Suqian Evening News
found. Most sales staff are very considerate
and kind to their older consumers.
They give them free sample products,
call them regularly to check in and
42
organize various activities for them in
groups. In this way, the elderly are always
willing to spend money on their
products in exchange for attention and
chance to meet other senior citizens in
their same situation. Some companies
do a good job at providing good products
and services to the elderly. However,
there are those that aim to deceive
and profit off unsuspecting elderly.

It is the latter mentioned companies
that the government is concerned
about. “Some elderly people still do not
know how to safeguard their rights”, says
an official in Municipal Food and Drug
Administration. The dubious sales people
tend to move on to another district
or city after making a certain amount of
deals. This makes it extremely difficult
for regulators to supervise their action
or find and bring them to justice if they
have in fact cheated customers.
An expert at the Center of Disease
Control suggests that besides improving
the elderly’s basic knowledge of
health products, the authorities should
take effective measures to increase
regulation of the health product industry
and severely punish those involved
in false advertising and making illegal
products. In addition, he hoped that the
children of the elderly could be more
attentive to their parents, such as taking
some time to accompany them on
regular basis medical examinations.
Unspoken rules: marketing
tricks
On-going marketing schemes in
China’s health product industry continue
to focus on senior citizens. Some
“unspoken” marketing tricks in the industry
lure them to spend more of their
money onto the products, as Fuzhou
Evening News reported.
First is product image. Health
products generally are divided into
three categories: nutritional supplements,
such as vitamins; Chinese herbs,
such as cordyceps sinensis and ganoderma
lucidum; and the so-called modern
bio-tech products, such as peptides and
nucleic acids. The “depth” of the marketing
of these three types of products
increases progressively, with the third
category being the most popular, because
“its concept is the most abstract.
Take nucleic acids for instance, the
salesman can say it is composed of the
basic unit of the human genome, but
the human body itself can not generate
it. Thus, people can only rely on the
intake of health product to get the vital
element. Of course the sales team uses
this information to strongly persuade
consumers to buy their product,” said
an executive from a health product
company in China.
When it comes to designing a product, the companies pay attention
to the following criteria. First, is the raw materials used in
the product. Companies with a moral compass choose appropriate
and safe ingredients. However, they can as long as it isn’t lethal.
The costing formula used for raw materials, packaging, and marketing
should not exceed 20% of its final price.
The second criteria used when creating a product is its efficacy.
How to market this and maximize sales? Manufacturers choose the
function that is popular among senior citizens such as improving
sleep quality, immune system boost, lowering of cholesterol, lowing
of high blood pressure, and treating cancer etc. In the investigation
of many illegal health products, the regulatory authorities accuse
some manufactures of falsely using others’ registration number. In
fact, what many companies are doing is obtaining legal registrations,
but after they receive the registration from authorities, they
replace all the packaging and inserts with health claims and directions
that were not originally approved.
The third criterion is packaging and dosage. The basic idea is
to make the product large. “For example, if there is a bottle that is
filled with 180 pills and is sold RMB 300, it is way better to divide
it into three smaller bottles, each of them filled with 60 pills and
place in a large ornate box with a selling price of RMB 600,” said
the executive. “Similarly, the dosage must also be ‘big’. One unit
packing should contain at least two months’ dosage to make the
elderly feel it was a good investment,” he added.
Finally, pricing must be set high, which is the use of reverse
psychology on consumer prices. If it is priced low, consumers will
begin to doubt the effects in the advertisements.
“For health food, pricing should not below RMB 300 a
month; for medical device that promises 50 year guaranteed use
should be priced higher than RMB 5,000,” the executive gave an
example.
However, with China’s State Food and Drug Administration
(SFDA) and provincial FDAs cracking down false advertising and
punishing manufacturers of illegal health products, these unspoken
rules may disappear in the near future.
(Author: from U.S.-China Health Products Association)
43

Industrial Watch
ELECTRONICS
Industrial Watch
Electronic Tech
Trends for 2013
By Lesley Cui
Larger screens, touch and gesture UIs and electric
cars were strong themes at this year’s Consumer
Electronics Show (CES), which concluded on
January 13. The event is the world’s largest annual
consumer technology trade show.
This year’s CES was the largest in the show’s 45-plus
year history, with some 3,250 exhibitors crammed into the
Las Vegas Convention Centre in Nevada to showcase more
than 20,000 new products.
The technology on display covered every conceivable
product category; ranging from electronic luxury cars to
Blutooth-enabled forks.
Here are a few consumer technology predictions for
2013 by iTnews.com.
Touch and gesture UIs
Touch-based user interfaces will continue to dominate
consumer technology in 2013, if CES is anything to go by.
Intel announced that all future Ultrabook laptops
would come with touchscreen displays.
While Microsoft kept its distance from this year’s
CES, plenty of third-party Windows 8 products were in
evidence on the showroom floor. Naturally, all of them
boasted touch-functionality.
Samsung also demonstrated its new TV Smart Hub
OS. The tiled interface allows users to control their TV via
voice and hand gestures.
CES 2013 was also used as a launching pad for new
tablet form factors; including Lenovo’s 27-inch “Table PC”.
Fatter smartphones
The “phablet” form-factor, somewhere between a
smartphone and tablet, is expected to pick up plenty of
traction in 2013.
At this year’s CES, new phablet devices were shown
off by Samsung, Sony, ZTE, Lenovo, Huawei and Vizio;
with plenty more waiting in the pipeline.
While the concept of a phone/tablet hybrid has been
44

around since at least 2010, consumer interest has received
a significant shot in the arm courtesy of Samsung’s Galaxy
Note range.
To date, the original Note has sold more than ten
million units worldwide, with the recently released Galaxy
Note 2 not too far behind.
“We expect 2013 to be the Year of the Phablet,”
claimed Neil Mawston, executive director of Strategy Analytics.
“The Galaxy Note was launched when four-inch
smartphones had become commonplace, so the leap to fiveinch
is no longer such a chasm.”
According to financial services firm Barclays, the phablet
market is expected to quadruple in value over the next
three years to $US135 billion ($A128.4 billion).
Based on what we saw at CES, the phablet craze won’t
be going anywhere. Nor will the form factor be limited to
the “premium” market: Kogan Technologies announced a
budget five-inch phablet at the show priced at just $A149.
Electric cars
The CES exhibit hall showed off a veritible fleet of
electric automobiles: including new cars from Ford, Daimler
AG, Lexus and Audi.
According to market research and consulting group
Pike Research, hybrid and electric car sales are expected to
leap 40 percent this year, while general car sales would only
increase by two percent.
This reversal in fortunes can be attributed to recent
technological advances that remove or minimize many of the
performance issues that concerned prospective customers.
Once maligned for their lack of horsepower, the modern
electric car has now emerged as a viable racecar: at this
year’s CES Audi showed off its R18 e-tron quattro hybrid,
which won the 24 hours of Le Mans race in 2012. An electric
powered Rolls Royce was also unveiled at the event.
4K video
With 3D failing to catch the imagination or wallets
of consumers, television manufacturers needed something
new to show off at this year’s CES: and they found it in 4K
TV.
Although it made its debut at CES 2012, 4K (AKA
“Ultra HD”) technology enjoyed a much bigger presence at
this year’s show. 4K TV provides a native resolution that is
approximately four times greater than current 1080p displays
or Blu-ray movies.
Crucially, Sony announced a 4K video distribution
service at CES which will offer native 4K content from
Sony Pictures and other partners.
Panasonic, meanwhile, unveiled what it claimed was
the world’s biggest 4K OLED TV (56 inches). It also
showed off a 4K 20-inch tablet prototype with a native resolution
of 3,840 x 2,560 pixels. Samsung, TCL, LG, Sharp
and Toshiba also debuted new 4K televisions at the event.
Although analysts are in agreement that 4K TV is
unlikely to take off in 2013 (due to a prohibitive price and
a lack of readily available content), the technology is worth
keeping an eye on.
The continued rise of Samsung
There was no getting away from Samsung Electronics
at CES 2013: in addition to having one of the biggest
booths at the show, the company was also responsible for
many of the most talked-about products.
According to social media analytics firm Salorix,
Samsung was the top CES brand in terms of online mentions.
The company’s foldable smartphone prototype, 4K
TV range and keynote address – which featured ex-US
president Bill Clinton – were all trending topics on Twitter.
On day two and three of CES, tweets referring to
Samsung announcements or products comfortably outpaced
every other exhibitor at the show.
Last quarter, Samsung reported record net profits of
$5.97 billion; with its Galaxy smartphone range contributing
much of the success. The vendor is expecting continued
earnings growth across its smartphone, TV, display panel,
component and semiconductor businesses in 2013.
Chinese tech firms get noticed
Chinese technology companies have been transforming
themselves from primarily manufacturers of other
brands into top-to-bottom industry players, and the shift
is on display at the CES, as reported by China Daily.
“China’s consumer-electronics companies are supplying
increasingly greater driving force to the global industry.
China has become a major destination where global
consumer electronics giants make premier releases of their
latest technologies and products, as well as the origin
place and test field for new technologies and products,”
said Jennifer Xu, vice-president of IDG Asia Pacific, part
of tech publishing and research firm International Data
Group Inc.
45

Chinese Millionaires
Stay Hungry for
French Luxury
Goods
By Audrey Guo
According to the Hurun
Research Institute, the
Hurun Report Chinese
Luxury Consumer Survey
2013 was released on January 15,
2013. The survey reveals the lifestyle
and brand preferences of China’s
wealthy consumers, and is intended
to provide a holistic understanding
of the spending habits and lifestyle
changes of this burgeoning, influential
and ever-changing consumer
class. This year the survey included
questions for the first time on the
“happiness index” of these wealthy
consumers.
The Survey also ranks the brand
preferences of the Chinese luxury
consumers, which are presented at
the annual Hurun Best of the Best
Awards today. 2013 is the ninth year
of the Hurun Report Chinese Luxury
Consumer Survey and Hurun
Best of the Best Awards.
Table 1: Best Brand for Gifting by Men
Brand % Key Gifting Category Country
1 Louis Vuitton 13.9 Accessories France
2 Apple 8.9 Electronics US
3 Hermès 7.2 Accessories France
4 Chanel 6.7
Apparel, Accessories,
Perfumes
France
5 Cartier 5.6 Jewelry, Watches France
6 Gucci 5.0 Accessories Italy
7 Montblanc 4.9 Pens, Accessories Germany
8 Dior 3.9 Accessories France
9 Burberry 3.3 Apparel, Accessories UK
10
Château Lafite
Rothschild
3.0 Alcohol France
11 Armani 2.9 Apparel, Accessories Italy
12 Prada 2.8 Apparel, Accessories Italy
13 Moutai 2.2 Alcohol China
14 Tiffany & Co 1.9 Jewelry US
15 Longines 1.7 Watches Switzerland
Source: Hurun Chinese Luxury Consumer Survey 2013
48

Hurun Reports presents findings from Chinese
Luxury Consumer Survey 2013
Chinese baijiu brand Moutai falls out of Top 10 Preferred Brands
for Gifting
Luxury watch industry has a tough year with only Longines listed
as a preferred watch brand for gifting, coming in at fifteenth
Millionaires don’t sleep much, only 6.5 hours a night. At the
weekend, half an hour more.
Burberry, Gucci and Montblanc jump into Top 10 Preferred
Brands for Gifting
The super-rich spend a third of their time on the road, 9.2 days a month
Australia out of Top 3 as preferred luxury destination for first time
since 2006
France most popular luxury destination, Britain rises to fifth
Switzerland is the year’s big performer as an education destination
Millionaires prefer the internet to source news, TV is down to
fifth place from first last year
The wealthier Chinese millionaires are, the more unhappy they are
Chinese Millionaires are concerned with improving their health
and family life
Preferred brands for
gifting
Moutai has struggled
this year, falling to thirteenth
place in the Preferred Brands
for Gifting, down from fifth
last year. This drop in popularity
came on the back of a
public debate about whether
government officials, the
largest customer base for
Moutai, should be allowed
to consume a brand which
is effectively a luxury
brand with its main product
retailing at RMB 1800
a bottle, and also a health scare
involving the use of plasticizers.
Moutai is the only Chinese brand
to make the list of preferred brands.
French wine maker Chateau Lafite
was the only drinks brand to make
the Top 10 brands for gifting, a
clear representation of the Chinese
luxury consumers’ newfound love
of wine.
The luxury watch industry has
had a tough year, perhaps brought
on by bad PR for the industry following
cases involving financial
irregularities of government officials
and watch ownership. Swiss
watchmaker Longines was the
only watch brand to make the list,
coming in at fifteenth place, and
replacing the more expensive Rolex
brand, which dropped off the list
altogether this year.
French gifts are still all the
rage, dominating the list. Accessories
(leathers etc.) are the gifts
of choice. The UK has an entry in
the Top 10 this year, with fashion
brand Burberry. Luxury brands
Gucci and Montblanc also performed
particularly well this year,
both breaking into the Top 10 for
49

the first time.
Apple moved up to second place
for Preferred Brands for Gifting by
Men, from fourth place last year. LV
and Chanel were top for Preferred
Brands for Men and Women respectively.
Hurun Report Founder and Chief
Researcher Rupert Hoogewerf said,
“This year, there is a clear trend towards
gifting more modestly-priced
top luxury goods.”
Personal investments
Property is still the key personal
investment option for most
surveyed (over 60%), despite
increased government control
on property purchases and a
generally poor market. Shares
are again in second place, but
the percentage taking up in
overall personal investment
fell to its lowest in 4 years.
Confidence
One in four are extremely confident
when asked on the economic
future, even though this number has
fallen to a four year low, the figure is
still surprising considering confidence
levels in Europe and the US. Those
who responded “not confident” rose this
year to 9%, still a relatively insignificant
number, but again, the highest since
records began four years ago.
Social responsibility
Tax is still considered the best way
to be socially responsible, and environmental
concerns are still important,
especially among respondents who are
over 45.
Collections
One in three respondents classify
themselves as watch collectors, which
is still by far the most popular collectible,
however, this does represent a
significant fall in popularity compared
to three years ago, where one in three
collected watches.
The popularity of Contemporary
art collection continues its downward
trend, falling in position again this year.
Trophy property collection is on
the up and is considered by a growing
number of Chinese luxury consumers
to be an essential jewel in their collection
portfolio.
Travel
Travel is the number one leisure
activity. However, Chinese super-rich
are going overseas less — 3.4 times a
year compared to 4.2 the year before.
Chinese super-rich are also on the road
less than the year before, 9.2 days a
month, three days less than last year.
Sanya is the most preferred holiday
home destination.
Australia’s popularity has fallen
dramatically from third to seventh on
the list of favoured international holiday
destinations, the first time it has fallen
out of the Top Three since 2006. The
Maldives, which shot into and then remained
in the Top 5 for two years, falls
to tenth, possibly indicating that the island
destination is going out of fashion.
Most notable, is the surge in popularity
of Europe as a luxury destination, which
had its most successful result since our
records began, with half of the Top 10
destinations, European. The UK, perhaps
on the back of the London Olympics,
is in at number five and Switzerland
has also performed well.
This year, Japan dropped out of
the Top 10.
Sports
Swimming is the hobby of choice
according to the results, beating golf to
top spot. Both swimming and golf have
taken the top two sports in recent years.
The surprising result was that of Horse
riding, which is up to fifth and is the
fastest rising sporting pursuit among
China’s wealthy.
Study abroad
There is no change at the top on
the previous year’s results for study
abroad preferences with the US ahead,
followed by the UK and Canada.
Australia dropped a place to fifth and
France jumped from ninth to seventh.
Media
In terms of media preference for
accessing news, TV dropped to fourth
from first place last year. The internet
was the medium of choice for news,
followed by newspapers in second and
magazines in third.
Millionaire happiness Report
The inaugural Millionaire Happiness
50

Table 2: Best Brand for Gifting by Women
Brand % Key Gifting Category Country
1 Chanel 15.9
Apparel, Accessories,
Perfumes
Table 3: Best International Luxury Destination
2013 2012
1 France 1 France
2 U.S.A. 2 U.S.A.
3 Singapore 3 Australia
4 Switzerland 4 Maldives
5 UK 5 Japan
6 Italy 6 Switzerland
7 Australia 7 Dubai
8 Dubai 8 Hawaii
9 Germany 9 Singapore
10 Maldives 10 Canada
Source: Hurun Chinese Luxury Consumer Survey 2013
France
2 Louis Vuitton 14.3 Accessories France
3 Cartier 11.1 Jewelry, Watches France
4 Tiffany & Co 10.6 Jewelry US
5 Apple 7.9 Electronics US
6 Montblanc 6.4 Pens, Accessories Germany
7 Gucci 6.0 Accessories Italy
8 Prada 4.8 Apparel, Accessories Italy
9 Dior 3.2 Accessories France
10 Burberry 1.6 Apparel, Accessories UK
Source: Hurun Chinese Luxury Consumer Survey 2013
Report is a sub-report of the Chinese
Luxury Consumer Survey 2013, documenting
the satisfaction that Chinese
millionaires have in their lives. In general,
the report shows that the richer
you are, the less happy you are.
The report shows that Chinese
millionaires don’t sleep that much, 6.6
hours on average during the working
week. The Chinese super-rich, fall into
two categories, those who are workaholics
and those who are winding down,
supposedly toward early retirement.
Self-made female millionaires are
more likely to be divorced, 35% of the
respondents, with an average age of
37 years, are either divorced or remain
unmarried which is twice the figure
amongst their male counterparts.
Men consider setting up their
own company as the happiest moment
of their life, whereas women consider
theirs to be falling in love.
Both male and female millionaires
are dissatisfied generally with their
health and want to spend more time
with their children.
For their children, Chinese superrich
wish most that they will either become
entrepreneurs themselves or take
over the family business.
Millionaires and the super-rich
are better educated than expected, with
43% and 56% respectively claiming to
have a post graduate degree, mostly Executive
MBAs.
Methodology
Between June and December 2012,
the Hurun Research Institute, a whollyowned
subsidiary of Hurun Report Inc,
surveyed 551 Mainland Chinese “millionaires”,
defined as individuals with
a personal wealth of RMB 10 million
(equivalent to USD 1.6 million / Euro
1.2 million / GBP 1 million). Amongst
them were 69 super-rich individuals
with wealth of RMB 100 million (USD
16 million / Euro 12 million / GBP 10
million). Their average age was 38 years
(40 among the super-rich bands); the
ratio of men to women surveyed was
7:3. Respondents were from 31 first and
second tier cities. The Hurun Research
Institute has carried out this survey now
for nine years running, making this the
largest and most authoritative survey of
its kind in China.
51

Global Automakers
Target at Chinese Market
By Richard Zhu
China is viewed as the top
investment destination for
global automakers, due to
its expanding demand and
export opportunities, according to a
recent survey by KPMG.
The survey was based on interview
with 200 automotive executives
across 31 countries, over half of whom
are business unit heads or higher. The
respondents come from all parts of
the automotive value chain, including
vehicle manufacturers, Tier 1, 2 and 3
suppliers, dealers, financial service providers,
rental companies and mobility
service providers.
The survey found that 70 percent
of respondents regard China as their
top choice for investments, ahead of
other BRIC countries — India, Russia
and Brazil. Moreover, 94 percent of
respondents said they expect China to
see growth in domestic vehicle sales,
underpinned by the rising middle class
and growing urbanization.
The survey also noted that four
Chinese manufacturers are expected
to be among the top ten companies
to gain global market share over the
next five years. The BRIC markets are
expected to account for nearly half of
all global vehicle sales by 2018.
“China remains a highly attractive
market due to its long term growth potential.
It is no surprise that automakers
are playing some big bets in China, and
doing so ahead of the other BRIC and
TRIAD markets,” said Andrew Thomson,
Asia Pacific Head of Automotive
and a Partner at KPMG China.
Challenges for automakers and
global trends
The survey showed that a range
of global mega trends are blurring the
52

traditional boundaries of the automotive model.
Automakers face environmental challenges, growing
urbanization, changing customer behavior and
the growth of the emerging markets. These rapid
changes are forcing a re-evaluation of traditional
business models, as OEMs seek to broaden their
core competencies and choose whether to move
into multiple new areas or narrow their focus.
The industry is being shaped by the developing
markets, e-mobility and the changing urban
environment. Consumers’ main priority is fuel efficiency,
with a preference for plug-in hybrids.
A large majority of respondents feel growth
in emerging nations is an important trend, while
the changing urban landscape is becoming a bigger
influence, with vehicle design, mobility-as-aservice
(MaaS) and connected car technologies increasing
in importance. These trends are common
to mature and emerging markets alike.
92 percent considered fuel efficiency to be the
number one purchase criteria, while pure battery
driven cars have lost ground in the battle for new
propulsion technology and are expected to attract
the lowest consumer demand by 2018. Plug-in hybrids
are seen as having the greatest sales potential
of electric vehicles, and just 17 percent of respondents
believe fuel cell-powered cars will be the
leading form of e-mobility.
In mature nations consumers are downscaling
to smaller, more efficient, greener cars. In the developing
markets on the other hand, a significant
proportion of buyers crave larger, more upscale
models such as Sport utility vehicles (SUVs).
SUVs are the fastest growing car segment in
China. According to the latest statistics from the
China Association of Automobile Manufacturers
(CAAM), the sales volume of SUVs rose 26 percent
from January to November 2012, to 1.79 million
units. This outpaced the 7.1 percent growth in
overall car sales recorded for the same period.
“While the trend among cost-conscious
consumers in mature markets is to downsize to
smaller, more fuel-efficient vehicles, a sizeable
proportion of consumers in the BRIC markets still
aspire to own bigger cars, such as SUVs. Innovative
new concepts, such as rentals and leasing, as
well as Mobility-As-A-Service (MaaS) models,
also have potential for the future, given continuing
urbanisation and the high density of the population
in cities across the country,” said Thomson.
The excitement over e-mobility has subsided
somewhat, with a majority of automakers from
both developed and emerging markets believing
that ICE will remain the cleanest, most efficient
technology for at least 6 years.
Most companies are hedging their bets and
spreading funding across a wide range of areas,
with ICE downsizing and plug-in hybrids expected
to receive the greatest investment over the next
5 years. OEM’s are allocating a higher proportion
of their resources into hybrids, with just 8 percent
investing primarily in battery technology.
The survey responses confirmed that the ICE
will remain the dominant powertrain for some
time. Two-thirds (67 percent) of respondents believed
e-vehicles will represent just 15 percent or
less of total new car sales by 2025. Nevertheless,
this still represents potential sales of up to 5.7 million
in China, 2.5 million in India, 3.8 million in
the US and 2.1 million in Western Europe.
41 percent of executives taking part in the
survey believed that government subsidies are
needed if e-vehicles are to become affordable.
Respondents acknowledged the changing
face of cities. More than half see cars as part of a
wider mobility concept and over two-thirds anticipate
alternatives to car ownership, such as sharing
or pay-on-use. Auto execs from India, Brazil and
the US are the most optimistic, while those from
China and Russia are a little more cautious.
A majority believed that 6-15 percent of urban
inhabitants will use mobility as a service in
the next 15 years, which translates to 105 million
people in China, 54 million in India, 31 million
in the US, 20 million in Brazil and 18 million in
Western Europe.
There are several ways to achieve positive margins
from MaaS, with respondents most optimistic
about the potential of added-value services such as
apps for mobile payment and location-aided services.
53

83 percent said that urban vehicle
restrictions will impact the design of city
cars. These changes also create a great
opportunity for new lightweight materials
to achieve fuel efficiency and innovative
styling. Eighty percent of the survey
participants expected such materials to
be in mass-production within 5-10 years.
On the other hand, the way people
buy cars is changing, and 64 percent
of auto executives predicted that online
and intermediary activity will increase
for dealerships — a figure that rises to
83 percent in the Americas. 63 percent
saw multi-brand dealerships taking
center stage, while respondents from
Asia Pacific have relatively more faith
in traditional dealership models.
“The dealership of the future should
look very different, with a stronger online
presence and a growth in multi-brand
availability,” said the survey. Most respondents
agreed that dealerships are also
likely to be touch points for a wider range
of products such as mobility services,
financial services and car servicing, particularly
in the BRIC markets.
With the recession continuing to
bite, 82 percent of respondents felt finance
is the most important value-added
service. Financing of e-components
is of less interest, but steadily increasing
as automakers offer owners the chance
to buy the car and lease the battery.
Over seven out of 10 respondents feel
that captives are an integral part of
their future business. Consumer credit
is a relatively new concept in China and
Russia, providing a huge opportunity
for branded manufacturers to expand
their presence and improve profitability.
The emerging markets’
potential
The survey indicated that respondents
saw no slowdown in the rise of
emerging markets, with 62 percent
reporting that the four BRICs share of
total new car sales will be between 41
and 50 percent by 2018. In 3-5 years,
BRIC countries are expected to export
a significant number of vehicles.
The pace of convergence is increasing,
with 61 percent believing
BRIC customers will demand the same
quality, safety and reliability as mature
TRIAD consumers by 2018.
KPMG believed that China is
clearly the top choice for investment, followed
by India, with Russia and Brazil
in third and fourth places respectively.
Significantly more respondents from
the BRIC countries (compared to their
TRIAD counterparts) are increasing
their investment in South Africa, Colombia,
Indonesia, Turkey and Vietnam.
As their export drive intensifies,
BRIC automakers are focusing on
South East Asia, with Eastern Europe
and South America the next two most
promising choices. Seventy percent of
respondents said that Eastern Europe
provides the best hub for entering
Western European markets.
However, it is getting harder to
export into or set up production facilities
in the four main BRIC markets,
with environmental restrictions the biggest
obstacle, while import/export duties
and governmental interventions are
the fastest rising barriers — particularly
India and China.
According to the survey, a significant
proportion of respondents believed
sales and production will decrease across
Europe and Japan over the next 5 years.
It is a completely different picture in the
BRICs, while hopes are also high for
two new Asian economies – Indonesia
and Malaysia – as well as for Mexico and
South Africa. Yet these growth markets
will not halt industry overcapacity —
something that automakers are uncertain
how to address effectively.
Over 50 percent of respondents
felt Japan, Germany, US, Korea, Spain
and France all have a high risk of overcapacity.
There is no common agreed
solution to overcapacity, although a
quarter believed that consolidation,
joint ventures or alliances could help resolve
the problem. Only France appears
to favor cutbacks in production.
The road to future success
The survey showed that as automakers
around the world seek growth,
they are considering a range of tactics,
including new products and new markets,
affordable vehicles, as well as sales
and price incentives. For OEMs, corporate
partnerships have the edge over
organic growth, while suppliers see
more benefit in expanding their value
chains and diversifying.
New products and technologies are
the key to growth over the next 5 years,
according to this survey. Other potential
tactics include entering new markets and
finding ways to improve the total affordability
of a vehicle — an approach that
appeals particularly to dealers. Respondents
from the BRICs are especially optimistic
that pricing and sales incentives
can stimulate sufficient extra demand to
stimulate growth.
Organic growth is still an important
part of automakers’ plans, although
corporate partnerships are seen as the
best strategy for success, particularly
among OEMs. Suppliers on the other
hand place a higher premium on finding
54

ways to expand their value chain and
diversify. Such a strategy is understandable,
as suppliers have traditionally
concentrated on very specific areas. The
broadening of technologies in the industry,
along with growing connectivity,
creates a need to diversify and widen
their global footprint to keep pace with
OEMs.
In the emerging markets, 61 percent
of suppliers said that mergers and
acquisitions will play a central role in
their future strategies, which reflects
the speed of growth in these regions. A
significant proportion of manufacturers
from the established TRIAD markets
have a preference for outsourcing noncore
activities, a practice that is yet to
be firmly established in the BRICs.
Most of the OEMs and suppliers
involved in the survey expected to increase
or begin investment in a number
of areas, with the most popular being the
improvement of safety, logistics and distribution,
and new plants. Interestingly,
many of the main trends are common to
both the TRIAD and BRIC markets, as
well as to OEMs and suppliers.
In comparison to their peers in
the BRIC countries, respondents from
the TRIADs have a preference for investing
in module/platform strategies,
lightweight materials, battery technologies
and fuel cells. This reflects the
well-established market operations and
production processes in these regions,
providing a strong foundation for investing
in new process or technological
innovations. One notable example is
Volkswagen’s MQB/MLB (modular
transverse matrix/modular longitudinal
matrix) strategy, which provides shared
platforms able to support a wide range
of models, vehicle sizes and brands.
With fresh concepts, materials and
technologies entering the automotive
landscape, the future roles of existing
players are uncertain. The survey’s
findings suggest that OEMs will not
be dominant in any of the emerging
technology building blocks, although
they will exert the greatest influence
in the development of lightweight
components. A quarter of respondents
say OEMs will be the major producer
of components for electrified vehicles.
Tier 1 suppliers are expected to have
even less of a part to play across all the
technologies. Auto executives deem
that joint approaches are the most likely
solution for manufacturing components
for e-vehicles and lightweight materials.
Connected car technologies have
leapt in importance since the last survey;
54 percent of respondents now
consider this to be a key trend, compared
to just 22 percent 12 months ago.
OEMs and technology companies are
both vying to control in-car technology
and own the expected substantial ensuing
revenues.
Technology companies appear
to be leading the race for dominance
with 42 percent expecting these organizations
to move ahead in this area,
increasing their lead over OEMs compared
to the previous year.
One challenge facing all the main
players is the incredible speed at which
connectivity solutions are changing, said
the survey. Automotive components’ development
is pedestrian by comparison,
and any fixed in-car system could potentially
be outmoded within months of the
car being launched, which not only puts
off consumers, but may also cause the
overall vehicle value to depreciate more
rapidly. Respondents — particularly
suppliers — feel that plug-in solutions
are the best way to avoid such obsolescence,
although this could take ownership
of connectivity out of the hands of
the manufacturers. Cloud-based services
are the next most popular option.
A new automotive world ahead
The survey said that the source
of OEMs’ margins depends in part on
their location. In the developed countries,
respondents are almost evenly split
between vehicle and electric powertrain
manufacturing, whereas in the BRICs,
the largest proportion (39 percent) have
a preference for vehicle manufacturing.
In addition to car production,
component manufacturing could figure
more highly, especially for European
OEMs. With several mass-market
manufacturers facing continued hard
times — especially in Europe — one
option could be a shift in the business
model down the value chain, to become
a Tier 0.5 supplier. Interestingly, all respondents
feel that traditional vehicle,
component and ICE manufacturing
will count for 54 percent of margins,
with the remaining 46 percent covered
by new technological development,
such as e-mobility or connectivity. This
suggests that OEMs have to broaden
their focus on existing and new areas of
business to avoid missing out on profitable
business opportunities.
A range of global mega trends are
blurring the traditional boundaries of the
automotive model. In the past, OEMs had
a relatively straightforward business model,
but today they must adapt to far greater
complexity to compete in electric vehicle
technology, innovative urban car designs,
mobility services, vehicle connectivity and
financial services, while coping with the
growing power of the emerging nations.
“As they embrace this new automotive
world, OEMs must choose
whether to move into multiple new
areas of business, whether to focus on
selected businesses, or whether to become
a niche supplier to the new breed
of multidimensional automaker,” the
survey suggested.
55

case Study
How to Shut down a Foreign Invested
Enterprise Legitimately?
By Liang Tao
Since 2007, nations around the
world have experienced a series
of major economic and financial
problems, causing some foreign
investors to illegally withdraw from
China for the purpose of cost saving
and debt evasion. Some of these foreign
investors failed to perform such withdrawals
by obeying China’s laws and
regulations, shutting down their business
abruptly and leaving a great deal
of unpaid debts and taxes. For example,
illegal withdrawals by foreign investors
in Qingdao occurred constantly in 2008,
involving 26,000 employees abandoned
and salaries unpaid amounting to RMB
160 million. Such illegal withdrawals
also occurred in other major cities.
Abnormal withdrawal of C-Mart
Immediately after Christmas of
2008, Beijing C-Mart Commercial
Company Limited (the “Beijing C-
Mart”), a subsidiary of the South Koreabased
C-Mart Supermarket, stopped
operation in Chaoyang District of Beijing
with its senior management members
disappearing overnight without
any pre-warning. Such abrupt operation
termination and management disappearance
consequently caused a series of
lawsuits involving account payables over
RMB 5 million. By February 2009, the
People’s Court of Chaoyang District
had accepted 27 cases filed against the
Beijing C-Mart by its suppliers, landlord,
employees and lenders arising from
Beijing C-Mart’s abnormal withdrawal.
This was the first batch of lawsuits concerning
the abnormal withdrawals by
foreign-invested enterprises (the “FIE”)
in Beijing after the breakout of the financial
crisis.
Beijing C-Mart was incorporated
in Chaoyang District of Beijing on January
29, 2007, with a registered capital
of USD 1 million, a major business
scope of providing groceries, food and
beverage, and a scheduled operation
term of 25 years. Upon such abnormal
withdrawal and follow-up lawsuits,
business license of Beijing C-Mart was
revoked on December 12, 2010.
In June 2009, the administration
for industry and commerce (the “AIC”)
of Chaoyang District launched an investigation
into the abnormal withdrawal
and misconducts of Beijing C-Mart and
its shareholders and senior management.
As a result, identification data of Beijing
C-Mart’s two shareholders and relevant
senior management members were uploaded
into the bad behavior recording
system operated and maintained by the
AIC, and therefore such persons would
be subject to restrictions or prohibitions
on future commercial movements
or travels in China. For the purpose
of facilitating the enforcement of the
judgments of the 27 aforesaid lawsuits,
Beijing C-Mart’s two shareholders and
relevant senior management members
will be further under the monitoring by
customs and public security bureaus, if
they return to China. It’s very difficult
for C-Mart to restart its business in
Beijing or launch new business in other
cities of China.
Adverse consequences
On November 19, 2008, the
56

Ministry of Commerce (the “MOF-
COM”) together with the Ministry
of Foreign Affairs, Ministry of Public
Security, and Ministry of Justice
promulgated the Work Guidance for
Transnational Actions and Litigations
Filed by the Relevant Interested Parties
against Abnormal Withdrawal of Foreign
Investment from China (the “Work
Guidance”). The Work Guidance is to
crack down on foreign investors engaging
in illegal or abnormal withdrawals.
Under the Work Guidance, if the
abnormal withdrawal of the FIE causes
losses to its creditors, a foreign enterprise
or individual, serving as (i) the
shareholder of the FIE (when it’s a limited
liability company); (ii) the controlling
shareholder or the director of the
FIE (when it’s a joint stock company);
or (iii) the actual controller of the FIE,
shall bear appropriate civil liability and
shall also bear joint and several liability
for repaying the FIE’s debts.
When an illegal withdrawal occurs,
and the foreign investors commit
tax evasion or delay in payment of a huge
amount of taxes in malicious ways, the
competent governmental authorities of
China may, through the central agencies
as specified in the treaties or diplomatic
channels, make a request to the country
to which such foreign investors have
escaped, for extradition of the foreign
investors, in order to impose criminal
penalties on them.
In practice, the foreign investors
illegally withdrawing and escaping
will be recorded by the AIC, and will
be disqualified and will not be allowed
to become shareholders, directors,
supervisors or managers in other companies
incorporated in China. The said
illegally withdrawing foreign investors
would also be recorded by the public
security bureaus, and may be kept in
custody and be criminally accused of
tax evasion when returning to China
in future.
Legitimate Liquidation
To avoid the aforesaid adverse
consequences and reputation deterioration,
the FIE shall be shut down
legitimately. Under PRC law, there
are generally two ways to shut down a
FIE: (i) filing with the court for bankruptcy
by the FIE itself or its creditors
(the “Bankruptcy Liquidation”), when
the FIE’s funds cannot cover its debts;
or (ii) voluntarily dissolving the FIE
without court supervision, when the
FIE is still able to pay its outstanding
debts or FIE is not able to pay its debts
but its creditors agree to compromise
with the FIE regarding the payment
arrangement on such debts (the “Nonbankruptcy
Liquidation”). This article
is not about the Bankruptcy Liquidation
performed under the bankruptcy
laws and regulations. This article is
about, when the investment pullout is
inevitable, how a FIE, its shareholders
and creditors can perform the Nonbankruptcy
Liquidation under the
company law and foreign investment
laws and regulations.
Prior to initiating the Nonbankruptcy
Liquidation process, a
FIE should be properly dissolved by
being approved by the commerce bureau
which is the local counterpart of
the MOFCOM. Several events can
trigger the dissolution of a FIE, for
example, expiration of its business
operation term as stipulated in its articles
of association, resolutions made
by its shareholders on dissolution, and
revocation of its business license by
competent governmental authorities.
When the FIE suffers heavy losses
due to mismanagement, force majeure,
or economic downturn, the shareholders
of the FIE can make a resolution
and submit to the commerce bureau
for approval, to embark on the Nonbankruptcy
Liquidation process. At
this stage, the commerce bureau will
issue a temporary approval.
Upon obtaining the temporary approval,
a FIE in China would typically
undergo the following steps: (i) the FIE
is required to setup a liquidation committee
for preparing liquidation application
and reports consisting of balance
sheet, inventory records and financial
evaluation report; (ii) the FIE’s creditors
must be notified in writing within
ten days after the liquidation committee
is setup, and the FIE should make an
announcement in the newspaper within
60 days thereafter; and (iii) the liquidation
committee submits the liquidation
application and reports to the commerce
bureau for approval, and obtains
the final approval for the liquidation
plan. Concurrently, the FIE is required
to apply for de-registration in the state
and local taxation bureaus and customs,
ensuring that the FIE has paid off all
outstanding taxes, governmental surcharges
and tariffs.
After both obtaining the final approval
from the commerce bureau and
completing the deregistration with the
taxation bureaus and customs, the liquidation
committee is required to submit
liquidation reports together with the final
approval from the commerce bureau
and de-registration permissions from the
Tax Bureau and Customs to the AIC,
for the purpose of conducting the AIC
de-registration which is an important
milestone, reflecting the abolition of the
legal personality of the FIE. Upon the
AIC de-registration, the FIE is required
to cancel its bank account and notify
other relevant government authorities of
its dissolution, such as, foreign exchange
authority, quality supervision bureau,
statistic bureau, finance bureau and public
security bureau.
The Non-bankruptcy Liquidation
for the FIE may take about 6 months,
and any dispute will further prolong
the process. For certain newly established
FIE whose capital has not been
fully contributed, under the process of
Non-bankruptcy Liquidation, foreign
investors do not need to contribute all
the unpaid registered capital. Subject
to local governmental authority’s direction
made on a case by case basis,
the FIE typically only contributes
the remaining capital to the extent
required to cover all outstanding debts
and shutting-down-costs. Compared
with the Bankruptcy Liquidation, the
Non-bankruptcy Liquidation is less
painful and more feasible.
Conclusion
As the Chinese government increasingly
pays regulatory attention to
the negative impact incurred by the abnormal
and illegal withdrawals of foreign
investors, foreign investors should
ensure that the FIEs shall be properly
shut down and liquidated in accordance
with the PRC laws before withdrawing
investment from China.
(Author: Lawyer with an international
law firm in Beijing)
57

Regional Trade & Investment
ASIA-PACIFIC
Weak Demand for Exports Slows
East Asian Economic Growth
By Audrey Guo
Slowdown in China and recession in Europe weigh on economic activity in
East Asia; regional growth expected to pick up mildly in 2013
The World Economic Situation
and Prospects 2013 (WESP)
forecasts average economic
growth in East Asia to pick
up mildly to 6.2 per cent in 2013 and
6.5 per cent in 2014, from an estimated
5.8 per cent in 2012. Last year’s growth
was down markedly from 7.1 per cent
in 2011 and 9.2 per cent in 2010 as
export growth faltered and investment
spending in many economies slowed.
The report said that economic
woes in Europe, Japan and the United
States and a sharper-than-expected
slowdown in China weighed on economic
growth in East Asia in 2012.
Current-account surpluses in the region
declined due to the slump in exports.
Household consumption, however,
continued to grow at a robust pace, supported
by resilient labour markets and
lower inflation.
China’s growth lowest in a
decade
Economic growth in China
slowed from 9.2 per cent in 2011 to an
estimated 7.7 per cent in 2012, the lowest
rate in more than a decade. Weaker
export demand and a sharp decline in
investment growth, especially in the
real estate sector, dampened overall
output growth.
The report predicts that China’s
economic growth will accelerate slightly
to 7.9 per cent in 2013 and 8.0 per cent
in 2014, as activity is supported by the
loosening of monetary and fiscal policy.
There are, however, substantial downside
risks for the Chinese economy
given uncertainties about external
demand and various domestic growth
challenges. While a hard landing of the
economy in 2013/14 — with annual
growth slowing to about 5 per cent —
is unlikely, it would have major global
and regional repercussions.
Higher-income and exportdependent
economies see
below potential growth
East Asia’s higher-income and
export-dependent economies — Hong
Kong Special Administrative Region
58

ASIA-PACIFIC
of China, the Republic of Korea, Singapore
and Chinese Taiwan — saw a
sharp drop in growth in 2012 as less
demand for exports led to lower capital
spending. According to WESP, these
economies are likely to experience
moderate recovery in 2013 and 2014,
but growth is projected to remain well
below potential.
Southeast asian economies
sustain growth momentum
The slowdown in China and the
higher-income economies of East Asia
contrasts with the solid growth momentum
in Indonesia, Malaysia, the
Philippines and Thailand, where buoy
-ant consumption and investment demand
largely offset lower net exports.
The strong growth performance in the
Philippines and Thailand was supported
by significant rises in public investment,
but also reflects a base effect following
weak growth in 2011. Growth
in this group of countries is forecast to
remain fairly stable in 2013.
Job markets remain resilient
despite slowdown
The WESP report found that labour
markets in East Asia have so far
remained resilient to the slowdown in
growth, although unemployment rates
edged up in some of the region’s exportdependent
economies over the course
of 2012. In several countries, including
Malaysia, the Republic of Korea
and Singapore, the unemployment
rate remained close to historic lows as
solid domestic demand helped partly
offset the impact of weaker exports and
manufacturing activity.
Unemployment in Indonesia declined
to 6.3 per cent in the first quarter
of 2012, about half the rate of 2006.
As in other East Asian countries, the
report said, most of the new jobs in Indonesia
were created in the service sector,
where productivity continues to be
much lower than in the manufacturing
sector.
Inflationary pressures remain
low
According to WESP, inf lation
has declined significantly in East Asia
over the past year as domestic demand
moderated and many international
commodity prices eased. For the region
as a whole, consumer price inflation averaged
2.9 per cent in 2012, well below
the 4.9 per cent recorded in 2011. Regional
inflation is projected to average
3.1 per cent in 2013 and 3.5 per cent in
2014, in line with an expected gradual
growth recovery.
More expansionary monetary
and fiscal policies
The report notes that monetary
and fiscal policies have become more
expansionary to counter the slowdown.
Against the backdrop of slowing economic
activity and reduced inflationary
pressures, East Asia’s monetary authorities
have shifted focus from containing
inflation to stimulating growth.
However, unless the regional outlook
deteriorates significantly, central banks
will maintain their cautious approach to
monetary policy.
On the fiscal side, China’s Government
is likely to maintain a proactive
policy stance, with an increase in
public investment spending on infrastructure
in 2013. Going forward, the
report said, fiscal deficits are projected
to narrow as a share of GDP in most
countries, as income growth and
government revenues are expected to
strengthen gradually and authorities
remain committed to long-term fiscal
sustainability.
Risks to continued economic
growth
While East Asia’s economic fundamentals
remain strong, the WESP
report cautions that there are significant
downside risks to the region’s
economic outlook. A sharp deceleration
in the pace of growth in China
would have a severe impact on economic
activity throughout the region,
with high-income countries likely to
suffer most from lower demand for
their exports.
Similarly, a further deterioration
of the sovereign debt crisis in Europe
remains a major risk factor for East
Asia since it would likely lead to renewed
turmoil on financial markets
and a sharp contraction in global trade
activity.
Table: East Asia: rates of growth of real GDP, 2009-2014
2009 2010 2011 2012a 2013b 2014b
East Asia 5.2 9.2 7.1 5.8 6.2 6.5
Brunei Darussalam -1.8 2.6 2.2 1.2 1.6 1.8
Mainland China 9.2 10.3 9.2 7.7 7.9 8.0
Hong Kong SAR -2.6 7.0 5.0 1.4 2.5 3.1
Indonesia 4.6 6.2 6.5 6.2 6.2 6.3
Republic of Korea 0.3 6.3 3.6 2.1 3.0 3.5
Malaysia -1.5 7.2 5.1 5.0 4.4 4.9
Myanmar 10.6 10.4 5.5 5.6 6.0 6.0
Papua New Guinea 6.1 7.6 8.9 9.4 4.2 6.1
Philippines 1.1 7.6 3.7 6.2 5.4 5.5
Singapore -1.0 14.8 4.9 1.4 2.5 3.3
Chinese Taiwan
-1.8 10.7 4.0 1.1 2.4 2.9
Thailand -1.1 7.5 0.1 5.3 4.6 5.0
Vietnam 5.3 6.8 5.9 5.0 5.7 6.2
Source: UN/DESA, based on data of the United Nations Statistics Division and
individual national sources.
* Note:
a. Partly estimated.
b. Baseline scenario forecasts, based in part on Project LINK and the UN/
DESA World Economic Forecasting Model.
c. Special Administrative Region of China.
59

Regional Trade & Investment
EUROPE
Dutch Businesses in China Perform Well
Dutch companies in China
are doing well, and are optimistic
about their future
in the market, according to
a recent survey by the Netherlands economic
network.
The survey, based on 174 Dutch
companies established in China,
showed that the majority of the companies
are profitable. The respondents
foresee an increase in turnover, profitability,
and investment for 2012 and
2013.
Companies in certain sectors in
the survey appeared as out-performers,
especially those active in agro-food and
trading. Large companies show somewhat
better results than SME’s.
However, in the past two years,
20 percent of Dutch businesses suffered
a loss. It turns out that predominantly
smaller sized start-ups suffer losses.
These companies seem to experience
more barriers to doing business than
others. The survey suggests that startups
may take more time to become
profitable compared to companies established
in China for a longer period.
“Evidently, being successful on the
Chinese market takes a long-term approach
and significant investment,” said
the survey.
China is becoming a strategic
market for Dutch companies. The findings
showed that local production and
services for the local market are both
increasingly difficult and strategically
important. Almost all of the respondents
serve the Chinese market, which
is also the most mentioned strategic
reason for establishing their business in
China. Two thirds of the respondents
report that their business in China contributes
to the company’s overall profit.
Dutch investment in China has
been steadily growing in the past two
decades. Figures from the Ministry
of Commerce of China show that
By Zhu Zijun
the Netherlands moved up to the rank of eighth investor in China in
2012 — the second from the EU, after Germany.
The findings reflected an overall positive future outlook of Dutch
companies in China. When asked about their expectations for 2012
and 2013, 70 percent of the respondents answered to expect an increase
in turnover; 60 percent expects higher profits. More than half of the
respondents expect investments to go up and half plan to hire more
employees in the foreseeable future.
“There are opportunities for Dutch companies not yet active on
the Chinese market and for those considering expanding their business,”
said Aart Jacobi, Ambassador of the Netherlands to China.
The Chinese business climate for Dutch companies is rewarding
and challenging as well. The survey noted that access to the domestic
market and stronger local competition is seen as one of the biggest
obstacles or challenges to doing business in China. Many of the companies
report difficulties in dealing with China’s regulatory framework.
Managing government relations also proves to be a challenge. On the
operational side many companies mention difficulties with regard to
recruiting and retaining skilled, talented workers. Obstacles to business
are both formal and informal.
Moreover, there is an increasing attention for Corporate Social
Responsibility (CSR) in China. The survey found that Dutch multinationals
have integrated OECD and ISO 26000 guidelines into their
Chinese activities. Considering the number of employees and sizeable
supply chains of these companies, the Dutch focus on CSR is relevant
in China. The results showed that there are ample opportunities to
raise awareness of CSR among smaller Dutch companies.
60

EUROPE
Chinese Investments
Welcomed in Switzerland
Switzerland welcomes all kinds
of Chinese investment, especially
setting up European
headguarters, Alain Eric Graf,
counselor of Swiss Embassy and director
of Swiss Business Hub China, said
at the Investing in Switzerland Seminar
on January 10 in Beijing.
China has been Switzerland’s
most important trading partner in
Asia. This relationship has continuously
evolved since the implementation
of the Sino-Swiss diplomatic and trade
relationship in the 1950s. Flourishing
Swiss-Chinese business relations is
shown through the increasing amount
of Swiss investment in China and the
boost in Chinese companies that are
setting up companies in Switzerland.
Switzerland’s traditionally strong
and stable economy is dependent on
successful exports. More than 50%
of Swiss products are sold abroad.
The Swiss have an 80% share in the
global luxury watch market and a 33%
share in the textile machinery market.
Switzerland is also the largest offshore
financial center in the world, managing
35% of global offshore assets.
“We welcome all foreign investments,
especially from China. 60% of
the US companies chose Switzerland
as European headquarter location.
Over 1,000 foreign companies steer
their European or global activities from
Switzerland. I’m very glad to see some
Chinese ‘First Movers’, such as Lenovo,
Acer, Huawei, ZTE, etc.” Graf said.
Huawei is an example. This Chinese
company opened its first Swiss
office in Berne in 2009. After 3 years,
it has been named as the sole managed
services provider for Sunrise’s fixed
and mobile networks in 2012. An unspecified
number of staff will transfer
to Huawei from Sunrise and from the
operator’s “previous technology partner”,
which is Alcatel.
Sunrise has more than 2.1 million
By Lily Wang
mobile customers, giving it a mobile market share of 24.1 percent, and 369,000
fixed broadband customers. The operator generated first-quarter revenues of 509.3
million Swiss francs (US$530 million).
Switzerland is the European champion of innovation with strong industries
in machinery; pharmaceutical, chemistry, and medical equipment; and biotech and
environmental technologies. Switzerland is also the home of world leading research
centers such as the European Organization for Nuclear Research and the Paul
Scherrer Institute for Swiss Energy Research.
According to Graf’s introduction, Switzerland’s economy is based on a highly
qualified labor force performing highly skilled work. The main areas include microtechnology,
hi-tech, biotechnology and pharmaceuticals, as well as banking and insurance
know-how. The service sector now employs the greatest number of people.
Most of the people working in Switzerland are employed by small and mediumsized
enterprises, which play an extremely important role in the Swiss economy.
“We have no residency requirements for board members (Managing Director
must stay in Switzerland),” he said, “tax rate of European headquarters and trade
companies in Switzerland is only around 10%.”
The mechanical and electrical engineering industries are one of the major
branches of the Swiss economy, no matter in terms of size of workforce or value
of exports. They are highly export-orientated, which means that they depend to a
large extent on trends in the international market place. Nearly 80% of their output
is exported, accounting for over 35% of Switzerland’s visible exports. Relatively
high costs at home have led a number of companies to relocate part of their production
abroad.
Besides, Switzerland is a relatively small country in terms of population, but
it is an international heavyweight when it comes to financial services. It is not surprising
given that the Swiss financial centre is a central pillar of the Swiss economy,
generating over 11% of Swiss GDP. Switzerland is the largest offshore financial
centre in the world. Its banks manage 35% of global offshore assets.
Furthermore, Switzerland tops the overall rankings in The Global Competitiveness
Report 2011-2012, and China (ranked 26th) continues to lead the way
among large developing economies, improving by one more place and solidifying
its position among the top 30. “Switzerland and China are close economic cooperation
partners, we should deepen the bilateral ties,” said Graf.
Global competitiveness report
Country Rank (2011-2012) Score Rank (2010-2011)
Switzerland 1 5.74 1
Singapore 2 5.63 3
Sweden 3 5.61 2
Finland 4 5.47 7
United States 5 5.43 4
Germany 6 5.41 5
Netherlands 7 5.41 8
Denmark 8 5.40 9
Japan 9 5.40 6
United Kingdom 10 5.39 10
Source: World Economic Forum (2011-2012)
61

Regional Trade & Investment
EUROPE
EU-China Trade in Service Sectors:
Challenged Future
Profile of service trade
While overall bilateral trade had
increased by nearly 45% from 2009 to
2011, EU-China trade in services had
remained relatively stable from 2008 to
2011. See Chart 1.
However, the EU exports to
China in service sectors actually shrank
from 23% of overall export in 2009 to
18% in 2011, despite the trade balance
in services increased slightly. European
services companies continue to find it
difficult to access the Chinese market,
particularly in the areas of transportation,
insurance services, royalty and
licensing fees, etc. See Chart 2.
The EU-China trade in services
surplus keeps slight increase despite
that some of the sectors are not fully
open in China. Nevertheless, the potential
to expand in service trade is thus
By Su Dan, Jiang Peng
huge, especially in the less administrated areas, such as travel, construction services,
and professional services. The surplus is be expected to widen further in the coming
years due to Chinese tourism booms (particularly as Chinese are keen on traveling
to Italy and France) and the steadily increasing demand for foreign professional services.
Chart 1 EU trade with China in services (2008 – 2011)
Source: Eurostat
Chart 2 EU 27 Trade balance in service with China by sector (2008 – 2010)
Source: Eurostat
62

EUROPE
Why challenged sector?
EU’s access to the Chinese service
market, although improved in recent
years, remains difficult. Certain key
sectors, such as banking, insurance, and
telecommunications, remain particularly
difficult for EU’s companies to access.
The major complains from the EU
on entering and expanding Chinese
service market are as follows:
(1) Excessive regulatory requirements
that limit service providers. For
example, of the 22,000 telecoms licenses
granted since 2001, only 23 have gone
to foreign companies. Foreign law firms
in China are still not allowed to employ
Chinese lawyers and their employees are
not permitted to participate in bar exams
to gain Chinese qualifications.
(2) Lack of transparency, unfair
implementation of public procurement
awards, and unsatisfactory appeals procedures
has made it very difficult for European
companies to access the Chinese
market in the area of public procurement,
according to European Commission.
For example, within the projects invested
by China’s stimulus package of 4 trillion
RMB, which played a significant role in
infrastructure construction, foreign construction
companies only won 2% of the
contracts. In addition, foreign construction
services are limited to designated
areas, such as contracts wholly financed
by foreign investment.
(3) Unfavorable regulatory environment
for foreign companies which
create an unleveled playing field for
EU companies. 43 % of EU companies
expect the regulatory environment for
foreign companies to worsen in the next
2 years, surveyed by European Commission.
For example, under China’s
Insurance Law, all insurance companies
operating in China must be registered
and all staff or organizations requiring
coverage in China must obtain insurance
from an insurance company established
and registered in China. While
most licensed foreign insurers and all
life insurers are fully incorporated in
China, they are still considered “non-
Chinese” and therefore subject to additional
regulatory requirements and
limitations, beyond those applicable to
local insurance companies.
Huge potential
Although bilateral trade in services
currently plays only a minor role in
EU-China trade, as China continues
to grow, there is huge potential.
EU is more advanced and developed
than China in service industry.
China market is large, and more
importantly, at the initial stage of
service industry development, which
means great opportunities to attract
EU companies.
The saying of “Grasp the China
Opportunity” was stated in the recent
EU parliament policy study. There are
steps which EU is going to take: (a) EU
states need to be better supported by a
more unified EU that takes more account
of the specificities of the China’s
situation; (b) EU needs to increase the
visibility political policies and measures
toward China; and (c) With its technical
expertise and diversity of approaches,
the EU needs to play a leading role in
thinking new economic policies forward.
Change is coming to service trade.
(Authors: Su Dan, undergraduate
of Law School of Central University of
Finance and Economics; Jiang Peng,
PhD of School of Finance of Renmin
University of China)
Links: General growth of EU-China trade
According to China Customs, the EU’s imports from China reached $333.99 billion in 2012,
down 6.2% year-on-year, while the EU’s exports to China edged up 0.4 % year-on-year to $212.05
billion. EU’s trade deficit in goods is predominantly in sectors like office and telecom equipment, textiles,
and iron and steel.
Data Source: Eurostat
63

Regional Trade & Investment
EUROPE
Sino-EU Trade War Unlikely
By Zhu Zijun
The European Union is not
expecting a trade war with
China, and will treat China’s
exports and investments under
the WTO rules, said the EU’s mission
to China at a press conference on
January 16.
“I am always puzzled by the reports
on trade war between the EU
and China, but I do not want to see it
become a reality,” said Markus Ederer,
the EU Ambassador to China, adding
that “It is not available for the EU to
have a trade war with China, since both
sides proceed under the WTO rules
and this is their right.”
In fact, “The proportion of trade
disputes between the EU and China is
actually very small and the Chinesemade
products involved in anti-dumping
or anti-subsidy cases make up less
than 1 percent of China’s exports to the
EU,” said Ederer.
In documents published in December
2012, the EU executive arm
said high anti-dumping and countervailing
duties should be imposed on
Chinese producers of organic coated
steel, Xinhua News Agency reported.
The European Commission’s antidumping
and anti-subsidy probes into
Chinese steel products are “unreasonable”
and will harm Chinese companies’
legal rights and interests, the Ministry
of Commerce (MOC) spokesman
Shen Danyang said at a regular press
conference.
Another case is that the EU in
early November of last year announced
that it would investigate alleged state
subsidies for Chinese solar panel manufacturers.
This came amid an existing
probe into allegations of “dumping”
such products in European markets.
“There is a case in terms of anti-dumping investigation into
China’s solar products. The case is ongoing under certain rules, and
the preliminary decision will be handed down in the first half of
this year,” said Ederer.
As for investigation into China’s telecoms, “There is concern
about China’s telecommunications industry in Brussels, but so far
there is no case,” he said.
Data from China’s General Administration of Customs
showed that Chinese exports were targeted by a total of 72 trade
investigations in 2012. Trade protectionism is prevalent globally
and the external environment for Chinese trade is worsening and
among the world’s major economies, Chinese exports were the most
targeted by trade protectionism, said Zheng Yuesheng, spokesman
for the General Administration of Customs.
“But as China has investigation into European exports, the
EU has investigations into exports from China, America and other
countries as well,” Ederer said.
Data showed that China’s exports to the EU reached $333.99
billion in 2012, a decline of 6.2 percent year-on-year. This makes
the United States surpass the EU that year to become China’s largest
export destination.
64

Regional Trade & Investment
By Cui Xiaoling
NORTH AMERICA
Privatization of US-Listed
Chinese Companies
As investor appetite wanes for
U.S.-listed Chinese companies,
investment banks and law firms,
which steered a good number
of Chinese companies onto the U.S. exchanges,
are now helping these companies
go private, after years of pitching clients
the benefits of going public.
Leaving the market
Demand remains weak for U.S.-listed
Chinese companies, said Mr. Nussbaum,
a partner at the U.S. law firm Loeb &
Loeb LLP, as reported by the Wall Street
Journal. “Investors don’t want to invest, the
stocks don’t trade. If Chinese companies
don’t see the financing, why are they going
to go through the process?”
The development comes as the
U.S. Securities and Exchange Commission
brings an administrative proceeding
against the Chinese affiliates of five major
accounting firms that audited U.S.-listed,
China-based companies. It’s another sign
that the era of reverse mergers—a backdoor
route to the securities market that
involves combining a private company with
an inactive, publicly traded shell—may
have ended. Another has begun: Chinese
companies going private.
“Reverse mergers are dead,” said Peter
Huang, a Beijing-based partner at the law
firm Skadden, Arps, Slate, Meagher &
Flom, which didn’t work on reverse mergers
but is helping more than a dozen U.S.-
listed Chinese companies go private. “I
don’t see any future for this space.”
Shrinking appetite from investors
Accounting scandals, regulatory scrutiny
and allegations by short-sellers have
eroded investors’ confidence in U.S.-listed
Chinese companies, especially those that
employed reverse mergers. Those companies
typically undergo less regulatory scrutiny
during the listing process than firms
that launch IPOs. Many Chinese reversemerger
stocks are trading at a fraction of
their levels two years ago.
Although Chinese technology firm
YY Inc. completed a U.S. IPO in November
2012, shares priced at the bottom
of the proposed range. While the IPO is
a sign that “investor appetite for Chinabased
companies may be slowly coming
back”, investors will be very selective about
buying these companies, said Joseph Chan,
a Shanghai-based partner at Sidley Austin
LLP. The YY deal was the second in the
U.S. in 2012, after an offering by Vipshop
Holdings Ltd.
A total of 25 U.S.-listed Chinese
companies announced plans to go private
in 2012, compared with 16 companies of
2011. Some of the larger Chinese companies
that have delisted or plan to do so
include advertising company Focus Media
Holding Ltd., electric motor maker Harbin
Electric Inc., and economy hotel chain 7
Days Group Holdings Ltd.
Going to last a few years
On going-private deals, investment
banks advising China-based companies
can earn 1% to 3% of the total transaction
size, according to bankers. These deals are
generally much less lucrative than the 3%
to 7% banks earned on the amounts raised
for these companies during U.S. IPOs,
and the 10% or more earned, including the
value of warrants, on capital raised during
reverse merger deals on U.S. exchanges.
Tianfu Yang, chief executive of
Harbin Electric, which became private in
66

NORTH AMERICA
November 2011, told analysts “privatization
is a choice for the company to
continue to be on the healthy path”
given the difficult U.S. capital markets
and numerous short-seller attacks on
the company. His proposal to buy out
the company, with financing by a bank
and a private-equity fund, dating back
to October 2010, would protect shareholders’
interests, he said.
The trend of U.S.-listed Chinese
companies going private will continue
for at least a few years, until U.S. investors
regain their confidence in Chinese
firms and the capital markets recover,
said Donald Yang, managing partner
at Abax Global Capital, an asset manager
in which Morgan Stanley owns
a minority stake. Abax Global, which
oversees $900 million in private-equity
and hedge-fund assets in Hong Kong,
has provided financing for a handful
of companies going private, including
Harbin Electric.
A source of business
Taking companies private has
become a major source of new China
business for Roth Capital. The Newport
Beach, Calif., firm is one of a
growing number of banks that have
sharply scaled back their mainland operations.
Roth Capital, which has raised
more than $3.1 billion in financing
since 2003 for China-based companies
that went public in the U.S. through
IPOs and reverse mergers, was hired
last year as a financial advisor to independent
committees in the going-private
transactions of Yucheng Technologies
Ltd. and Shengtai Pharmaceutical
Inc.
The board-appointed committees’
role is to evaluate the fairness of
buyout offers made by the chairmen
of Yucheng Technologies, a Chinese
provider of information-technology
services, and Shengtai Pharmaceutical,
a maker of pharmaceutical raw materials
such as glucose.
Some in the industry question
whether companies seeking to retreat
from public markets will want to deal
with the same banks and law firms that
brought them there.
Companies may think, “Why are
you going back to the guy who got you
into this?” says Jim O’Neill, co-founder
of Jin Niu Investment Management in
Beijing, which raises capital for Chinese
companies and has advised three
firms in the past year on going private.
Mr. O’Neill said he has spoken with
companies going private that are reluctant
to hire the same advisors who took
them public.
Roth Capital said it has no prior
banking relationship with either company,
but declined to comment further.
Argyle, Texas-based Halter
Financial is advising Si Chen, chief
executive officer of New York Stock
Exchange-listed American Lorain
Corp., a snack-foods company, on a
going-private proposal he has made
to shareholders. Halter, a major player
in helping Chinese companies list in
the U.S. through reverse mergers, also
advised American Lorain on its 2007
reverse merger.
Meanwhile, Loeb & Loeb said it
has worked on nearly a dozen goingprivate
transactions for companies
including Harbin Electric, Fushi Copperweld
and Yongye International Inc.
The law firm has an existing relationship
with some of these companies:
It represented Yongye in its reversemerger
transaction in 2008, and Harbin
Electric and Fushi Copperweld in
financing deals when they upgraded
to the Nasdaq Stock Market from the
OTC Bulletin Board in 2007.
Mr. Nussbaum said the firm’s
role in helping companies access the
U.S. securities market years ago doesn’t
compromise its ability to represent
them now. In privatization transactions,
“there’s a role for someone who
knows the company well,” he said.
67

Regional Trade & Investment
By Lesley Cui
LATIN AMERICA
Chinese Tech Giants Eye Brazil
Big Chinese consumer-technology companies
are dominant at home, but they have
struggled overseas. Now, in an attempt to
change that, they are charging into Brazil
and other emerging markets, according to a Wall
Street Journal report.
Foray into the rising market
The Chinese like emerging markets because,
for a change, they don’t have to start way behind
established American companies. By moving into
Brazil aggressively, Chinese PC maker Lenovo
and Internet-search company Baidu hope to gain
an edge over companies like Hewlett-Packard and
Google. In addition, some U.S. companies that are
leaders at home and in Europe have a smaller footprint
here because of Brazil’s long history of protectionism
and red tape and its high cost of labor,
particularly compared with Asia.
Chinese and U.S. companies agree that the
Brazilian market is increasingly important. While
its middle class is growing, it is already big enough
to make overcoming Brazil’s high cost of doing
business worthwhile.
Lenovo, the world’s No. 2 PC vendor, says it
expects more than 20% of the next half-billion PC
buyers to be in Brazil. The company, which surpassed
Dell in part because of a push into markets
including India and Russia, says its Brazil operation
is now its biggest outside of China.
Brazil always has had a large population, and
now, with the growth in its middle class, “this population
has more consumption power,” says Silvia
Quintanilha, vice president of client services at the
research firm Millward Brown in São Paulo. “All
of the brands are looking at us now. All of them are
arriving in Brazil.”
Brazil is “the most important” market outside
of China, says Jonathan Dillon, head of Baidu’s international
business, which is also launching more
services in Thailand and Egypt. Brazil is “a highgrowth
economy in general, has a high-growth
Internet, and we think that some of the big global
players haven’t given as much localized attention to
the market,” he says. “There’s a good opportunity
for us to come in.”
According to a recent survey by its central
bank, Brazil’s gross domestic product is expected to
grow 3.3% in 2013, after a dip to an estimated 1%
last year.
Not easy expansion
But it may not be easy for Chinese companies,
which continue to struggle to build their brands outside
China. Baidu has had limited success offering
its service in Japan. And while Google has lost some
traffic in Brazil to new rivals, the company still dominates
the Internet sector across several categories and
is familiar to Brazilian users. Lenovo is seeing high
growth in emerging markets and in global PC sales,
but it hasn’t performed as well in the U.S. against
such familiar brands as H-P, Apple and Dell.
68

LATIN AMERICA
Meanwhile, Chinese companies aren’t the
only newcomers to the race in Brazil. Facebook,
which didn’t have operations here until the last
couple of years, saw its Brazilian visitor numbers
grow 41% to 43.3 million a month in September
2012, with average time spent on the site growing
208%, according to comScore. That made the
country one of Facebook’s fastest-growing markets.
Meanwhile, the number of users on Google’s Orkut
social-networking site in Brazil over the year
leading up to September dropped 55%, while time
spent on the site fell 83%. ComScore says that collectively
Google sites are the most popular in Brazil,
but the average time spent on them has shrunk
45% over that period.
South Korea’s Samsung Electronics also has
made an aggressive push in the Brazil market, including
undercutting competitors’ prices, and it has
already become one of the top PC vendors and the
top smartphone vendor in the country.
Apple, though an important player in the market,
doesn’t enjoy the kind of market share in Brazil
that it has elsewhere. Its products are priced at a premium
here and it has yet to open a Brazilian Apple
Store, relying instead on a network of resellers and
mobile carriers.
Attempt to copy the success at home
Chinese companies hope to replicate the success
they have had in their home market by giving
their products and sites a local flavor. Baidu gained
an edge over Google in China in part by tailoring
its services to adapt to quirks in the market, such as
making its search bar bigger to accommodate Chinese
characters more easily.
The company launched its Hao123 home-page
service for Brazilian users this year. It provides links
to popular websites that are designed to make navigation
easier for new Internet users. It also plans to
launch a full-service search engine to compete with
Google and has assigned hundreds of engineers to
the effort.
For Lenovo, establishing operations in Brazil
means the firm will assemble, design and source
more of its product parts locally. That will help reduce
its taxes and enable it to compete better with
local PC vendors, such as market leader Positivo
Informatica on price. Lenovo has 4,000 employees
in Brazil. It has just completed the acquisition of local
electronics brand CCE for 300 million Brazilian
reals ($146.5 million) and is already building a $30
million plant.
Lenovo hopes the acquisition of CCE, a lowerend
brand, and being more competitive on prices
will boost its business in fast-growing, less wealthy
regions of the country.
Brazil is like a “blank slate” because competitors
“may not see the Brazil opportunity as big enough to
go through the trouble of such fundamental changes,”
says Dan Stone, head of Lenovo’s Brazil business.
From acquisitions to new manufacturing and
research facilities, “we are making more investments
in Brazil than in any country outside of China.”
Meanwhile, Tencent, the operator of QQ , the
most popular instant-messaging service in China,
has launched a Portuguese version of its growing
private-messaging mobile application Weixin, called
WeChat in English. Right now, San Franciscobased
WhatsApp is the most popular smartphone
private-messaging service in Brazil.
69

Regional Trade & Investment
LOCAL
Chongqing’s Foreign Trade Surges
By Richard Zhu
China’s foreign trade growth slows to
6.2 percent in 2012, while Southwestern
China’s Chongqing Municipality
showed a different picture.
Its foreign trade of last year registered a rapid
growth of 82.2 percent.
Data from Chongqing Customs shows
that Chongqing’s foreign trade volume totaled
$53.2 billion in 2012, ranking No. 2 in Western
and Central China and the 11th nationwide, 6
positions higher over the year 2011. The city’s
exports volume amounted to 38.57 billion, up
94.5 percent over the previous year, ranking
first in Western and Central China, while the
imports volume reached 14.63 billion, up 56.2
percent year on year.
Among Chongqing’s exports, laptops
played a major role, with the total exports over
35 million. In 2012 Chongqing has exported
35.44 million laptops, valued at $12.54 billion,
1.3 times and 1.4 times from a year earlier respectively.
“Laptops became the main force of the
city’s exports, and its exports of last year accounted
for over 30 percent of the total exports,”
said an official with Chongqing Customs.
Data also shows that though in the context
of the sluggish external demand due to the
European debt crisis and slow recovery of world
economy, Chongqing’s exports to Europe and
America rose sharply. In 2012 the city’s foreign
trade volume with the Europe Union totaled
$12.04 billion, up 92.8 percent, 1.1 times over
2011, while its foreign trade with America
reached $9.31 billion, 1.3 times over the previous
year.
The rapid development of the processing
industry had boosted the growth of imports and
exports in Chongqing. The import and export
volume in the processing industry of Chongqing
in the first half of 2012 totaled $7.8 billion, accounting
for 31.1 percent of the whole import
and export volume, according to Xinhua News
Agency.
As China’s first inland bonded port, Cuntan
bonded area handled over 150,000 TEU
70

LOCAL
(twenty-foot equivalent unit) containers for import
and export in the first half of 2012, up 10.6
percent year on year. Up to June, the investment
for the bonded area reached RMB 20 billion
($3.13 billion) with the sales output value reaching
RMB 11.7 billion ($1.83 billion), Xinhua
reported.
Meanwhile, benefited from the city’s
industrial transformation and upgrading,
Chongqing also put stress on import. Chongqing
imported mechanical and electrical products
worth of $11.43 billion, up 66.9 year on year.
Additionally, Chongqing’s foreign direct
investment (FDI) has surpassed 10 billion in
the past two years. The actual utilized FDI in
Chongqing amounted to $10.53 billion in 2012,
flat with the previous year.
“Through the rapid development of 2011
and 2012, Chongqing’s investment speed may not
be as quick as the past two years, but Chongqing
still remains an investment hot spot with its high
growth rate in foreign trade,” said Huang Ke,
deputy director of Chongqing Bureau of Statistics.
Statistics from the Bureau of Statistics of
Chongqing shows that the gross domestic output
of Chongqing rose to RMB 1.15 trillion, up 13.6
percent, 5.8 percentage points higher than the
national average. The growth ranks first in West
China and second nationwide.
With a population of 32 million, the city
occupies 82,400 square kilometers of territory
and is divided into 38 administrative districts and
counties. Located at the core of the economic
belt of the upper Yangtze, Chongqing is the hub
of transportation and a high-tech based modern
industrial base. It connects China’s vast west and
eastern coast. It is the only transportation hub in
West China that integrates water, land, and air
transportation.
Not only enjoying great natural resources,
the mountainous city is also rich in cultural landscapes
blending of the BaYu culture, immigrant
culture, three gorges culture and metropolitan
culture.
Chongqing is the forth largest opening-up
city following Beijing, Shanghai, Guangzhou due
to a large number of consulates-generals, permanent
foreign media organizations and foreign affairs
departments here.
Thanks to Chongqing’s becoming a municipality,
the construction of the Three Gorges
Dam Project and the implementation of the Going
West Policy, recent years have witnessed the
increasing strengths of Chongqing. The city has
been restructuring economy and opening wider
to the outside world, deepening the reform of systems
and accelerating infrastructural construction
in achieving economic and social development in
a comprehensive way. The city is considering integrating
technologies such as Cloud Computing
and Internet of Things into its future development.
Data shows that in 2011, the total local
GDP of Chongqing broke through RMB 1 trillion
yuan ($1,608 billion), up 16.4 percent over
the previous year. The total industrial output value
was RMB 1.2 trillion ($1,929 billion), an increase
of 28.2 percent year on year. And the industrial
sector saw added value increased 22.7 percent.
71

Building a “Golden” Card for
Bombardier by “Sincerity”
—Story of Mr. Zhang Jianwei, President and Chief Country Representative of Bombardier China
By Echo Zhao
By whatever means people
would take when travel in
China, they may easily find
a Bombardier product: from
APM (Automated People Mover) at the
airport to INNOVIA ART (Advanced
Rapid Transit) 200 heading for downtown
in Beijing, from metro cars in cities
to VHS (Very High Speed) trains and
high-altitude trains or airplanes connecting
cities. These are just part of the
tremendous successes for Bombardier
business in China, while all is closely
linked with Zhang Jianwei, President
and Chief Country Representative of
Bombardier China. In his pursuit of
72
these achievements, the sincerity and
geniality from the bottom of Zhang’s
heart is the sharp weapon for his success.
As he quite often says, “Just like a seed, a
person should take root, then germinate
and come into bloom till bear fruit from
where you were planted”. To some extent,
from the meaning of this sentence
this could summarize the development
route of both himself and the business of
Bombardier in China.
Success is the award of paying
efforts over years
“When heaven is about to confer
a great office on any man, it first
exercises his mind and heart with suffering,
and his sinews and bones with
toil. It exposes his body to hunger, and
subjects him to extreme poverty. It
confounds his undertaking.” This pearl
of ancient Chinese wisdom (Mencius,
circa 370BC) is a saying that motivates
Zhang most of all, as it vividly depicts
what he has experienced in the past.
In 1974, after he finished high
school, Zhang went to a village in
Shandong province with some other
people to heed the call of Chairman
Mao for all educated urban youth to
go and work in rural areas. That year,
he was only 17. As an educated young

man, he needed to work as a farm laborer
and write slogans on walls with
lime as a propagator. Before dawn, he
had to get up to plant “Trees of Youth”
or build “Roads of Youth”. At night, he
needed to engage in propaganda work.
When recalling this, Zhang became
quite athrill.
In 1978, the year that China resumed
the university entrance examination
system, Zhang was secretarygeneral
of the Youth League committee
in the local municipal region. As such,
he tried to set an example to the other
young people, but actually ended up
taking an entirely different
direction upon being
admitted to the department
of Internal Combustion Engines
at Tianjin University.
He had never expected that
his life would completely
change the moment he
entered the university. He
excelled in his studies, and
in 1982 he was the recipient
of the “National Student of
Excellence” award. After
graduation, he was retained
by the university as an assistant
professor, and some time later
he chanced upon an opportunity for
further study in Canada. After years
of hard work, he was conferred with
an MBA, then a PhD in management
from Montreal University.
In 1995, Zhang joined Bombardier
as a project manager. A colleague
was quite surprised, challenging to
Zhang: “I am a manager after 17 years
at the company. How come you, a Chinese,
are a manager right after joining
the company?” “That’s why I need your
help,” answered Zhang with his natural
humility.
Maybe it was this sincerity that
helped Zhang to steadily progress
through the ranks and gain the recognition
of other people. In just a little
over ten years, he went from project
manager to director, then vice president,
and now president of Bombardier
China. He hacked his way through
difficulties on his own to help Bombardier
secure today’s important place in
China’s transportation sector. All the
tastes during the years, no matter sour
or sweet, spicy or bitter, it would be
It was sincerity
that helped
Zhang to steadily
progress
through the
ranks and gain
the recognition
of other people.
only Zhang himself knows.
Just like a saying from a movie, “in
a life of vicissitudes, time is the biggest
thief…”, it is time that took away the
rigors of toil from him in 1974, made
away the vigorousness as a young man in
1978, moved away his hesitation when
he devoted into business world from academia
in 1995. While he never forgets
everything that he has gone through,
and getting along with time, there’s one
thing that is most precious in his personality
has been kept, i.e. sincerity.
In 1999, as vice president of Bombardier
Transportation, Zhang was sent
to China alone to solely
develop the Chinese market
for the company. At that
time, Bombardier was little
known in China. He even
didn’t have an office, so he
had to work from home.
When asked whether
he had foreseen the prospects
of rail transportation
in China, “Not at all, and
to be honest, I didn’t want
to come back at that time,”
Zhang answered in his typical
frank style. He further
explained that he had just become accustomed
to life in Canada and was garnering
experiences in a western enterprise
in order to step in global market for
future career progression. But this ambition
was cooled down by the mandate in
China. “Furthermore, I was sent back
by Bombardier. Had I chosen to come
back under my own steam, I would have
been praised for ‘coming back to reward
my homeland’,” said Zhang with a wry
smile.
After coming to terms with this
disappointment, Zhang had to gather
his strength to face a new market, and it
was at that time that his talent gradually
came to the fore.
To secure large orders valued
more than hundreds of millions, a great
deal of trust is necessary. In the eyes
of many people, this would never have
been possible without a government
background, especially at that time.
But Zhang did it with his sincerity that
he had always considered to be an essential
professional ethic and the way
he has been dealing with people. The
groundwork of Bombardier in China
is entirely built on his sincerity. He
has never seen any merit in engaging
an intermediate agent or a sales team
with a “background” in order to get
business. He firmly believes that his
approach has helped him focus on
understanding the needs of customers
and keep a rein on expenses. During
this busy period, many people were
moved by his perseverance and sincerity,
and with the passage of time,
people came to connect his name and
the company’s together.
It’s been more than 10 years past,
Bombardier currently operates three
joint ventures and seven wholly-owned
businesses in China, staffed with over
4,000 employees. There are Bombardier
offices in Beijing, Shanghai,
Guangzhou and Hong Kong. In total,
it has secured orders for more than
4,000 rolling stocks and 550 electric
locomotives in China. At the beginning
of this year, it successfully got
orders to supply propulsion equipment
and control systems for 315 metro cars
for export and provide propulsion and
control system for 378 metro cars for
Beijing Metro Line 14.
These days, when people inside
the industry talk about cooperation,
without even giving it a second
thought, they mention Zhang Jianwei.
“Go to see Zhang Jianwei in Bombardier,,
he’s reliable,” they say. This
shows the influence that Zhang has
accumulated. “It all rests in sincerity in
the treatment of others,” he said with
much pride when asked what the secret
was.
When he first returned to China,
Zhang might not have realized that
this seemingly inconspicuous quality
would bring him so many pleasant
surprises. But now he sees it and cherishes
it increasingly as he constantly
advances.
After experiencing numerous
hardships over a decade in the business
world, Zhang’s faith in sincerity
remains unchanged, and it is a quality
and wisdom rarely seen nowadays.
Joint development brings
numerous breakthroughs
Sincerity is not only a faith of
Zhang, but also of Bombardier, which
strives to deliver considerate services to
73

customers.
As emissions and noise have become
major factors that cause deterioration
in quality of life in urban areas,
Bombardier has taken the lead as “the
pioneer of environment protection” in
improving rail transportation technologies
and transforming rail transportation
into an ecologically advanced
transportation model.
This has given birth to the PIR-
MOVE system and Bombardier’s highspeed
trains with ECO4 technology to
address the energy efficiency, reliability,
environmental and affordability concerns
of operators.
Trams running through parks,
ancient towns and churches used to be
something so imaginary that such a notion
was only depicted in cartoons. The
advent of the catenary-free PRIMOVE
system empowers trams to go safely
through these places and bring people
from modern cities to ancient towns,
putting people back in touch with ageold
culture.
“Technology transfer” has remained
a sensitive topic in the media
around the world. “In the Western
media, many Western business leaders
claim that they would never transfer
any technology to China, but when
they are sitting in front of the Chinese
government and partners, they talk
a lot about technology transfers. As
a matter of fact, they tell the truth in
neither case,” says Zhang calmly when
touch this subject. “The collaboration
between Bombardier and China has
gone beyond technology transfer. We
develop the technologies and products
most suitable in China market with
Chinese partners, because technology
transfer alone can’t fundamentally improve
the products. The most advanced
train running in high plateaus has been
developed by Bombardier’s joint venture,
BST, in China,” he noted.
In 2003, as soon as the Qinghai-
Tibet railway project was approved,
BST organized experts for field studies
on climate, environment and local
cultures in Tibet. After two years of
investigation, it has collected a mine of
precious information, which in the end
helped it won the bid.
People-centric designs are what
most appeals to passengers taking the
train running on the Qinghai-Tibet
74
railway. “It’s a deluxe train for the public.
Many seasoned travelers choose to
ride this train to go to Tibet, because
for them, it is of itself an experience.
What attracts them is not only the
train, but also the culture behind it,”
said Zhang.
The train was jointly developed
by highly skilled Bombardier staff and
Chinese engineers, and is manufactured
in Qingdao. Technology transfer
alone would never have enabled the
development of such sophisticated and
complex high altitude trains. Only
when both parties treat each other with
sincerity and make concerted efforts to
work together with a win-win approach
can breakthroughs be made.
Moving forward in a meshing
engagement
In the process of gear transmission,
regardless of different sizes, the
driving gear and driven gear have the
same tangential velocity where they are
engaged.
Zhang draws a vivid analogy between
the collaboration of two parties
and the engagement of two gears, and
another between the common interest
and the tangential velocity. “Friction
may arise if the tangential velocity varies;
if there is no common interest, conflicts
will occur,” said Zhang. “In business,
over 50% of the issues are caused by miscommunication
and misunderstandings.
Only when we enhance communication
and put ourselves in the shoes of the
other party, can we find a common interest
and achieve a win-win result.”
To reach for a mutually beneficiary
result, we not only need to protect our
own interests, but more importantly, we
need to look at things from the angle
of the other party. “It’s just like two
vendors selling a particular product.
The first vendor might simply say how
good his product is, but the second one
recommends the product most suitable
for the needs of the customer. The customer
will naturally select the second
one,” said Zhang, who, like the second

vendor, always gives consideration to
the customer and uses the customer’s
needs as his driving force.
The Ministry of Railways signed
a framework agreement for strategic
collaboration with Bombardier, the first
one it had ever executed with a foreign
company. As a result, many people
thought that Bombardier must have
done a very good job in government
public relations. But actually, Zhang
doesn’t pay much attention to the typical
public relations overtures. What he
pursues is common interest and a winwin
result. So he uses an unconventional
yet effective way to win the trust
of customers and partners, i.e. sincerity.
Many Chinese employees of foreign
companies speak ill of foreigners in
front of their compatriots, and criticize
China in front of foreigners in order
to win favor with both parties. Zhang
really dislikes this behavior. “It is quite
wrong. We should act as a bridge for
communication between the two parties.
For instance, we should explain to
Chinese people about foreign companies’
business practice, and conversely,
advise western colleagues the facts in
China. This can really be quite risky,
but only in this way can we enhance
mutual understanding and minimize
misunderstandings for a win-win result,”
he added.
This is not an easy thing to do, but
Zhang shows mastery at it, moreover,
such an approach in the workplace
makes him even more generous. For
example, shortly after he returned to
China he was at an industry exhibition
in Shanghai. He had brought some foreign
colleagues with him to help out in
the booth. Some Chinese visitors asked
him to interpret because they naturally
regarded Zhang as a translator when
they saw his oriental face amongst foreigners.
Zhang’s colleagues somewhat
awkwardly explained to the visitors that
Zhang was the vice president of the
company as their leader, but he didn’t
care a jot, and without hesitation, he
did the interpreting.
Zhang is now striving to build up
the brand effect for Bombardier. He
hopes that when people see a plane or a
train, they will think of Bombardier or
“the people of Bombardier”. He’s not one
for overstated or meaningless advertising.
He wants a situation where people
will wholeheartedly value the products,
people and services of Bombardier. He
seems to not even fully realize that Bombardier
has already done an amazing job
in this regard. In this internet age, where
corporate scandals and negative information
spread so fast as the
hot topic, Bombardier is not
tainted by any of these. “We
treat people and do things
with sincerity. We just let our
true achievements speak for
us,” he said.
In the run-up to the
selection of “the Top 20 Influential
Business Leaders in
China’s 20 Years’ Reform”,
he received many phone calls
asking him to prepare materials
for government officials
and experts’ evaluation. But
he never believed these calls
and even thought that perhaps
the callers were mischief-makers.
It was not until he received a call from
the National Development and Reform
Commission (NDRC) that he realized
it was true. “I could hardly believe it.
All I’ve tried to do over the years is to
do the best of my job, that’s it!” he said.
For him, this honor was an award
“All I’ve tried
to do over the
years is to do
the best of my
job, that’s it.”
not only for himself, but also for Bombardier.
The award winners included
such luminaries as the “father of hybrid
rice” Yuan Longping and the very famous
national economist Wu Jinglian.
Bombardier has drawn many remarkable
lines in China,
made up of the numerous
trains the company has
supplied to the country,
with the background being
Zhang’s sincerity.
As a well-known
old saying in China goes:
“People could only feel
true sincerity when you
sincerely treat them into
their heart”. There are
some people who no matter
how much care and affection
they give to others,
are always seen as hypocritical,
but just a smile
from someone may seem rather cordial.
Sincerity is not a posture; it is a quality
that comes from the depths of the
heart. It is just possessed by Zhang that
is a competence not money-related, and
just from this, people get to know that
the success of Bombardier in China is
by no means accidental.
Zhang Jianwei, President and Chief Country
Representative of Bombardier China
Zhang Jianwei was promoted to president and chief country representative
of Bombardier China in September 2005. In addition to transportation,
he is also responsible for aerospace business in China, including leading,
managing and coordinating the relations with government entities, as
well as strategic support for management of relations with other key jurisdictions.
Zhang graduated from Tianjin University in 1982 with an engineering
degree (Internal Combustion Engine). He received his MBA from Montreal
University (Canada) in 1991 and his Doctorate in Administration also from
Montreal University in 1996. His specialty was Enterprise Strategy. In addition
to his Doctoral Dissertation, he is the author of several articles on management
science published in Canada and France.
In 2005, he was honored by the China Enterprise Confederation as “The
Most Notable Business Leader” of the year. And in 2012, he was awarded “Start
of Reform - The Top 20 Influential Business Leaders in China’s 20 Years’ Reform”.
Zhang began his career at Bombardier as a project manager in 1995.
Since then, he has held a variety of positions with rapidly increasing responsibility.
He was promoted to Director of Projects and Business Development
in 1997 and to Vice President of Bombardier Transportation in 1998.Prior to
joining Bombardier, Zhang held several academic appointments as Teaching
Assistant and as Assistant Professor. In addition, he was a senior government
officer at the municipal level in China from 1975 to 1982.
75

InfoRMATION
Investment Projects
in Zhengzhou City,
Henan Province, China
Name of project: Zhengzhou automobile city (park) project
Project overview: This is an automobile city project invested
and constructed by Henan Wantong Holding Group
in south part of Er’qi district. The planned total area of the
project is approximately 1200 mu. The total investment is
about 2 billion yuan, and the construction period is about 3
years.
Total investment: RMB 1.9375 billion
Approach to cooperation: Sole Proprietorship
1. Project organizer: Henan Wantong Holding Group Corporation
2. Contact: Xing Jianxu
3. Tel: +86-371-68981980
4. Email: touzicujin@163.com
Name of project: Contiguous development of Biboyuan
Square
Project overview: The project is located south Baoquan
Street, north Huaihe Road, east Jiaotong Road, and West
Zhengzhou Railway Bureau Sports Center. It covers an area
of 82.3mu, or 54,894 square meters. Supporting infrastructure
around the project: the project site is adjacent to Daxue
Road, Huaihe Road and other main and secondary roads of
Zhengzhou. With Jingsha Fast Track opened to traffic, the
traffic in the surrounding will become more convenient. Water,
electricity, gas and heating: the project is located within
the urban road network, and water, electricity, gas and heating
pipelines and other infrastructure facilities have been
buried under the municipal roads. Schools, hospitals and
banks, etc.: projects around the region include Zhengzhou
University, Zhengzhou No. 44 Middle School, Maternal and
Child Health Hospital of Henan Province, People’s Armed
Police Hospital, CBC, ICBC, and other basic facilities. Public
Transportation: this project is near the West Square of
Zhengzhou Railway Station, Zhengzhou Long-distance Bus
Station; in addition, people can take bus to reach any area
in Zhengzhou City. The total construction area is 108,300
square meters. Existing residential area is 78,300 square meters.
Existing business area is 30,000 square meters.
Total investment: RMB 1.86 billion
Approach to cooperation: Sole Proprietorship
1. Organizer: People’s Government of Er’qi District
2. Contact: Hu Hanfei
3. Tel: +86-371-68980025
4. Email: touzicujin@163.com
Name of project: Phase II of Zhongtou Huijin City Project
Project overview: The project is located south first phase
of Zhongtou HuiJin City project on east Jianshe Road,
west Daxue Road, north Zhengzhou Artillery College
and Pudong Development Bank Daxue Road Branch, and
east Zhengzhou Garrison Command area. Area: 36.9 mu,
24,596.46 square meters. Supporting infrastructure around
the project: the project is adjacent to the First Affiliated
Hospital of Zhengzhou University, Daxue Road, Jinshui
Road and other major and minor roads of Zhengzhou. With
Jiefang Road Interchange opened to traffic, the traffic in the
surrounding will become more convenient. Water, electricity,
gas and heat: the project is located in the urban road network,
and water, electricity, gas and heating pipelines and other
infrastructure facilities have been buried under the municipal
roads. Schools, hospitals, banks: in the surrounding area
where the project is located, there is Zhengzhou No.4 High
School, First Affiliated Hospital of Zhengzhou University,
banks, postal savings and other basic facilities.
Public transportation: There are a number of bus lines in
the project area, and people can take bus to reach any area in
Zhengzhou City.
Total investment: RMB 930 million
Approach to cooperation: Sole Proprietorship
1. Organizer: People’s Government of Er’qi District
2. Contact: Hu Hanfei
3. Tel: +86-371-68980025
4. Email: touzicujin@163.com
Name of project: Shenglong City Project
Project overview: This project is located at the intersection
of Hanghai Road and Songshan Road. It covers a total
area of 750 mu and its total building area is 2,800,000 square
meters, of which 500,000 square methers are for commercial
use; Shenglong City is connected from north to south by a
pure walk commercial street with a length of 1500 meters
connects and it is a super compound commercial block with
multiple functions and full range of business types, which
integrates shopping, consuming, catering, entertainment,
leisure, body-shaping, commercial office work, star hotel and
residence, etc.
Total investment: RMB 1 billion
Approach to cooperation: Leasing
1. Organizer: Henan Junlong Real Estate Co., Ltd.
2. Contact: Zhang Lihong
3. Tel: +86-13838273787
4. Email: touzicujin@163.com
Name of project: First Phase of Henan Kaipu Chemical
Park project
76

INVESTMENT
Project overview: This project is mainly to construct facilities
with annual production of 100,000 tons of sodium
hudroxide and 40,000 tons of high purity hydrochloric acid,
as well as facilities with annual production of 100,000 tons of
PVC, 100,000 tons of nitrobenzene and 50,000 tons of aniline.
Total investment: RMB 496 million
Approach to cooperation: Sole Proprietorship, Joint Venture
1. Organizer: Henan Kaipu Chemical Co., Ltd.
2. Contact: Niu Tei
3. Tel: +86-371-64569286
4. Email: gysswj@163.com
Name of project: Shangdu Logistics Park of Guancheng
Hui District
Project overview: The park is located in the southeast
part of Zhengzhou surrounded by Middle Route Project
of South-to-North Water Division, Beijing-Guangzhou
Railway, Fourth South Ring Road and Around-the-city
Highway. Its planning area is aobut 38.9 square kilometers
and the planned investment is about 2.1billion Yuan.
Objective & Thoughts: As a logistics park in Zhengzhou
that provides services to the whole province, it will focus its
modern logistical services on Zhengzhou’s manufacturing
and trade, assisted by services on steel, industrial commodities
and daily-use commodities. With industrial chains and
supply chains as the guidelines, it will have the following
basic functions: regional logistics and urban distributions
(trade, collection, storage, distribution, transportation,
transit, circulation processing and information treatment.
With ecological, environmental-friendly and highwayrailway
integrated services, it will serve as a modern cluster
of logistics and a platform of logistical services and public
information. All these are aimed to build the park into a
core of logistical service in the southern part of Zhengzhou
and a key node in the modern logistical network of Zhengzhou
and Henan as a whole.
Total investment: RMB 2.1 billion
Approach to cooperation: Sole Proprietorship, Joint Venture
1. Organizer: Administrative Committee of Shangdu Logistics
Park of Guancheng Hui District of Zhengzhou City
2. Contact: Qu Min
3. Tel: +86-371-66319611
4. Email: guanchengshangwu@163.com
Name of project: Contiguous development of Ou’ya Hotel
Project overview: The project is located north Longhai
Road, east Daxue Road, west Jiaotong Road, and south Market
Street. Its area is approximately 133.35mu, or 88,811.1
square meters. Supporting infrastructures around the project:
the project site is adjacent to Daxue Road, Longhai Road
and other main and secondary roads of Zhengzhou. With
Longhai Road Interchange opened to traffic, the traffic
in the surrounding will become more convenient. Water,
electricity, gas and heating: the project is located within the
urban road network, and water, electricity, gas and heating
pipelines and other infrastructure facilities have been buried
under the municipal roads. Schools, hospitals and banks: in
the surrounding area where the project is located, there is
Zhengzhou No. 102 Secondary Schools, Longxi Primary
School, Xingfu Road Primary School, Henan Provincial
MCH, banks, postal savings and other basic facilities. Public
transportation: the project site is near Zhengzhou Railway
Station, which can meet the need of the long-distance travel.
In addition, there are numerous bus lines in the project area,
and people can take bus to reach any area in Zhengzhou
City. The total construction area is 170,360.95 square meters,
and existing residential area is 96,771.16 square meters.
Total investment: RMB 2.79 billion
Approach to cooperation: Sole Proprietorship
1. Organizer: People’s Government of Er’qi District
2. Contact: Hu Hanfei
3. Tel: +86-371-68980025
4. Email: touzicujin@163.com
Name of project: Jindai Industrial Park of Guancheng Hui
District of Zhengzhou
Project overview: Located at a key junction on the south
development axis extending outwards in a cross-shaped
way, Zhengzhou Guangcheng Hui District enjoys convenient
transportation, promenient geographic advantages
and unique locational advantages. It is in an area surrounded
by the 3rd South Ring Road in the north, Highway
No. 107 in the south, Jingguang Railway and Zhongzhou
Avenue in the west and Zhengwei Highway (Jindai Road)
in the East. This area connects with Zhengzhou Economic
Development Zone, with Airport Expressway running
through it that leads to Xinzheng International Airport.
It is close to the planned Beijing-Guangzhou High-speed
Railway and South Zijinshan Road, which is the second
important road leading to the airport. Not far away from
Xiaolizhuang Village railway cargo station, it is only 2.5km
away from Zhengzhou East Railway Station, the biggest
Class-A railway station in Asia. With Zhengwei Highway
in its middle east part, it provides a 100m-wide area for the
planned light-rail railway. Jindai Park has a planned area
of 11.42 square kilometers, and it may be enlarged to 18
square kilometers after expansion. The park aims to serve
as an environment-friendly zone integrating industry and
logistics. With satisfactory infrastructures, the park is wellprepared
for enterprises to move in.
Total investment: RMB 500 million
Approach to cooperation: Sole Proprietorship, Joint Venture
1. Organizer: Administrative Committee of Jindai Industrial
Park of Guancheng Hui District of Zhengzhou
2. Contact: Qu Min
3. Tel: +86-371-66319611
4. Email: guanchengshangwu@163.com
(Source: Department of Commerce, Henan Province)
77

InfoRMATION
China Fairs
& Expos
Transportation, Logistics, Storage
2013 Guangzhou International Auto Repair,
Maintenance, Testing Equipment &
Technology Exhibition
Date: March 3-March 5, 2013
Frequency: Yearly
Venue: Guangzhou International
Convention and Exhibition Center
Pazhou Complex
Exhibits: Automobile maintenance
equipment, auto repair, automotive
test equipment, etc.
Tel: 86-21-64271916
Fax: 86-21-54864556
Email: 84653438@163.com
2013 China Guangzhou International
Automotive Aftermarket and Service Exhibition
Date: March 3-March 5, 2013
Frequency: Yearly
Venue: Guangzhou International
Convention and Exhibition Center
Pazhou Complex
Exhibits: Automobile maintenance
equipment, auto repair, automotive
test equipment, etc.
Tel: 86-21-64271916
Fax: 86-21-54864556
Email: 84653438@163.com
The 10th Guangzhou Auto Air Conditioning
and Refrigeration Technology
Exhibition
Date: March 4-March 6, 2013
Frequency: Yearly
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Whole vehicle air conditioning
system, auto air conditioning
accessories, auto air conditioning
products, refrigeration equipment, etc.
Add: Rm 511, Block A, Lianming
Commercial Center,
No.20 Songbai East Street,
Guangzhou, Guangdong,
China, 510405
Tel: 86-20-86374869
Fax: 86-20-86374257
Email: bestguangzhou@
vip.163.com
2013 The 8th China International Auto
Electronics and Car Radio Product Exhibition
Date: March 4-March 6, 2013
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Communication and
navigation system, car radio, safety
electronic product, vehivle integrated
electronics and parts, engines electric
control system, etc.
Add: Rm 302, Block B, Lianming
Commercial Center, No.20 Songbai
East Street, Guangzhou, Guangdong,
China, 510405
Fax: 86-20-86374257
Web: www.84t.cn/dz
2013 Guangzhou International Transport
Exhibition
Date: March 9-March 11, 2013
Frequency: Yearly
Venue: Guangzhou International
Convention and Exhibition Center
Exhibits: Road and bridge facilities,
traffic safety-related products, intelligent
transportation and equipment,
parking facilities and auxiliary equip-
ment, etc.
Add: Rm 1010-1012, Guanglian
Building, No.750 Dongfeng East
Road, Guangzhou City
Tel: 86-20-87609552
Fax: 86-20-87609552
Public Security and Fire Control
2013 China Chongqing International
Police Anti-Terrorist Technology and
Equipment Exhibition
Date: March 23-March 27, 2013
Venue: Chen Jiaping International
Exhibition Center
Exhibits: Police protection equipment,
police cars, bullet proof vehicles, police
motorcycles, etc.
Add: 10-3, Guangyujinxin Building,
13 Jianxindong Road, Jiangbei Dist,
Chongqing, China, 400020
Tel: 86-23-86830282
Fax: 86-23-86830069
2013 China Chongqing International
Community Public Security Products
and Technology Equipment Exhibition
Date: March 25-March 27, 2013
Venue: Chen Jiaping International
Exhibition Center
Exhibits: Biometric technology and
equipment, access control system, etc.
Add: 10-3, Guangyujinxin Building,
13 Jianxindong Road, Jiangbei Dist,
Chongqing, China, 400020
Tel: 86-23-86830136
Fax: 86-23-86830137
Information Technology, Network,
Communication, Broadcast
The 2013 China Content Broadcasting
Network Exhibition
Date: March 23-March 25, 2013
Frequency: Yearly
Venue: China International Exhibition
Exhibits: Film and TV production,
equipment, system and technology of
management and transmission, etc.
Add: No.2 Fuxingmenwai Street, Beijing,
China
Tel: 86-10-62126805
Fax: 86-10-62126807
Web: www.ccbc.cn
78

FAIR & EXPOS
Glass, Ceramics, Plastic, Rubber
The 6th Dongguan International Die-
Casting and Foundry Exhibition
Date: March 17-March 20, 2013
Frequency: Yearly
Venue: Dongguan International Exhibition
Center
Exhibits: Die-casting equipment, etc.
Add: 402 Jin’ao Garden Hotel,
33 Dongcheng-dadao Dongguan,
Guangdong, China, 523008
Tel: 86-769-22388565
Fax: 86-769-22387875
The 9th Dongguan, International Electroplating
Industry and Surface Treatment
Exhibition
Date: March 17-March 20, 2013
Venue: Dongguan International Exhibition
Center
Exhibits: Plating, electroplating bath
and raw materials, surface finishing
products, etc.
Add: World Trade Expo Co., Ltd,
Rm 01, 21F, Times Center, 928-930
Cheung Sha Wan Road, Kowloon,
Hong Kong, China
Tel: 852-21392280
Fax: 852-21392281
Web: www.shimaobolan.com
The 9th Dongguan International Coatings
Exhibition
Date: March 17-March 20, 2013
Frequency: Yearly
Venue: Dongguan International Exhibition
Center
Venue: Dongguan International Exhibition
Center
Exhibits: Plating, electroplating bath
and raw materials, surface finishing
products, etc.
Add: World Trade Expo Co., Ltd,
Rm 01, 21F, Times Center, 928-930
Cheung Sha Wan Road, Kowloon,
Hong Kong, China
Tel: 852-21392280
Fax: 852-21392281
Web: www.shimaobolan.com
The 2013 Beijing Stone Fair
Date: March 15-March 18, 2013
Frequency: Yearly
Venue: China International Exhibition
Center
Exhibits: Marble, granite and other
kinds of stones, quarry stones, slabs
and blocks, artificial stone products,
tomb stones, stone-carved crafts, etc.
Add: China International Exhibition
Center, No.6 Beisanhuan East
Rd, Chaoyang Dist, Beijing, China,
100028
Tel: 86-10-64630548
Fax: 86-10-84540980
Web: www.build-expo.com
The 10th China International Explosion-
Proof, Electric Technology and Equipment
Exhibition
Date: March 22-March24, 2013
Frequency: Yearly
Venue: China International Exhibition
Center (New Hall)
Exhibits: Explosion-proof controller,
explosion-proof air conditioning system,
explosion-proof wireless network
data controller, etc.
Host: Beijing Zhenwei Exhibition
Co., Ltd, etc.
Add: Rm 801, Building E. Kaixuancheng,
No.170 Beiyuan Road, Chaoyang
Dist, Beijing, China, 100101
Tel: 86-10-58236588
Fax: 86-10-58236567
Email: expec@zhenweiexpo.com
Commercial Trade
2013China Hefei Consumer Goods Fair
for Spring Festival
Date: January 30-February 7, 2013
Venue: Anhui International Convention
and Exhibition Center
Exhibits: Garments, shoes and beddings,
art gifts, sugars, cigarettes, specialty
foods, etc.
Host: The Organizing Committee of
2013 China Consumer Goods Fair for
Spring Festival
Organizer: Anhui Daming International
Exhibition Service Co., Ltd.
Add: Rm 109, Tongshan International
Shopping Mall, Economic Development
Zone, Hefei, 230601
Tel: 86-551-2783338
Fax: 86-551-2783397
Email: xuechao11111@yahoo.com.cn
Contact Person: Xue Chao
2013 Fuzhou Spring Festival Goods Fair
Date: January 30-February 10, 2013
Venue: Fuzhou International Conference
& Exhibition Center
Exhibits: Food, beverage, wine, grocery,
etc.
Add: No.4 Xiyang Road Fuzhou
Fax: 86-591-83300308
Energy and resources, Mining
Industry, Metallurgy, Welding,
Electric Power,
The 17th China Guangzhou International
Industrial Control Automation and
Instrumentation Exhibition
Date: March 4-March 7, 2013
Frequency: Yearly
Year of the first Event: 1997
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Fluid power transmission,
mechanical transmission, etc.
Web: www.fuyang.com.cn
2013 China Guangzhou International
Power Transmission and Control Technology
Exhibition
Date: March 4-March 7, 2013
Frequency: Yearly
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Fluid power transmission,
mechanical transmission, air compressing
technology, etc.
Add: Rm 3104, Tianjunge, No.365
Tianhe Road, Tianhe District,
Guangzhou, Guangdong, China,
510620
Tel: 86-20-38823660
Fax: 86-20-38823677
Web: www.fuyang.com.cn
Email: info@fuyang.com.cn
79

InfoRMATION
Electrical Apparatus, Heating,
Air-conditioning
The 13th China International Heating
Ventilation & Air-Conditioning Expo
Date: March 15-March 17, 2013
Frequency: Yearly
Venue: China International Exhibition
Center
Add: Rm 380, 4F, Hall 1, China
International Exhibition Center,
No.6 East Beisanhuan Road, Beijing,
100028
Tel: 86-10-84600666
Fax: 86-10-84600669
Email: gaoqian314@126.com
The 13th China International Heating,
Bentilation & Air-Conditioning Expo
Date: March 15-March 17, 2013
Frequency: Yearly
Venue: China International Exhibition
Center
Exhibits: Solar thermal collector, vacuum
tube collector, flat-plate thermal
collector, water tank, etc.
Host: China Council for the Promotion
of International Trade Construction
Industry Sub-Council, China International
Exhibition Center Group
Corporation
Organizer: Beijing B & D Tiger Exhibition
Co., Ltd
Tel: 86-10-84600666
Fax: 86-10-84600669
Email: CIHE-HVAC@163.COM
The 13th China International Heating
Ventilation & Air-Conditioning Expo
Date: March 15-March 17, 2013
Frequency: Yearly
Venue: China International Exhibition
Center
Add: Rm 380, 4F, Hall 1, China
International Exhibition Center,
No.6 East Beisanhuan Road, Beijing,
100028
Tel: 86-10-84600666
Fax: 86-10-84600669
Email: gaoqian314@126.com
Sound, Musical instruments,
Lighting
2013 The 11th China Guangzhou International
Expo on Pro Sound and Light
Date: March 10-March 12, 2013
Frequency: Yearly
Venue: China Import and Export
Commodities Fair Exhibition Complex
Exhibits: Special sound, lighting,
stage machinery and equipment, KTV
equipment LED display, etc.
Add: No.171, Lianxin Road, Guangzhou,
Guangdong, China, 510033
Tel: 86-20-83560265
Fax: 86-20-83549078
Web: www.soundlight.cn
2013 The 10th China Guangzhou International
Music Instruments Expo
Date: March 10-March 12, 2013
Frequency: Yearly
Venue: China Import and Export
Commodities Fair Exhibition Complex
Exhibits: Copper pipe music instrument,
electronic music instrument,
keyboard music instrument, etc.
Add: Guangdong International Science
and Technology Center, No.171,
Lianxin Road, Guangzhou, Guangdong,
China, 510033
Tel: 86-20-83560265
Fax: 86-20-83549078
Web: www.guangzhou music.cn
2013 Fuzhou International LED &Outdoor
Lighting Exhibition
Date: March 11-March 13, 2013
Venue: Fuzhou Jinshan Exhibition Center
Exhibits: LED chips, epitaxial wafer,
Epi Wafer and outdoor lighting, etc.
Tel: 86-10-68660512
Fax: 86-10-68666067
Email: bjlzhb@163.com
Textile and Clothing
2013 China International Clothing &
Accessories Fair
Date: March 28-March 31, 2013
Frequency: Yearly
Venue: China National Convention
Center
Exhibits: Garment, accessories, etc.
Tel: 86-10-85229382
Fax: 86-10-85229018
Contact person: An Yiheng
Fur, Leather, Shoes
The 14th China Dongguan International
Shoe Machines, Materials and Industrial
Technology Exhibition
Date: March 29-April 1, 2013
Frequency: Yearly
Venue: Guangdong Modern International
Exhibition Center
Exhibits: Footwear machinery, plastic
injection equipment, materials, different
types of bags, bag machine,
chemical raw materials, leather, leather
processing equipment, etc.
Add: Rm 1005, Jinyulan Plaza, 1st
Dapu Road, Shanghai, China, 200023
Tel: 86-21-63045419
Fax: 86-21-64181136
Web: www.xt-sh.com
Beauty and Cosmetics
The 35th Guangzhou International
Beauty, Hairdressing, Cosmetics Products,
Import and Export Fair
Date: March 10-March 12, 2013
Frequency: Yearly
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Fragrance, cosmetics, personal
care products, daily cleaning,
franchise, naildoing products, etc.
Tel: 86-20-86259008
Fax: 86-20-86259533
Email: info@gzbeautyexpo.com
80

FAIR & EXPOS
Sports Goods
2013 Asia International Sports Brand &
Sports Style Exposition
Date: March 4-March 6, 2013
Venue: China International Exhibition
Center
Exhibits: Sports ware & related
Host: China International Exhibition
Center Group Corporation, etc.
Add: F3 CIEC Service Mansion,
6 North 3rd Ring East Rd, Beijing,
China
Tel: 86-10-84600388
Email: liujing@ciec.com.cn
Medical Care, Health Care
2013 The 24th Fujian International
Medical Equipment Fair
Date: March 3-March 5, 2013
Venue: Fujian Economic and Trade
Exhibition Center
Add: No.260 Wusi Road, Fuzhou,
Fujian, China, 350003
Tel: 86-591-87842218
Fax: 86-591-87810540
2013 Midwestern Hefei Medical Equipment
Exhibition
Date: March 5-March 7, 2013
Venue: Anhui International Convention
and Exhibition Center
Exhibits: Diagnose equipment, treatment
equipment, etc.
Organizer: Tarsus Hopes Anhui Exhibition
Co., Ltd.
Add: Rm 401 Block A Meidi Sunshine
Building No. 71 Jinzhai Rd,
Hefei, 230022
Tel: 86-551-3615593
Fax: 86-551-3615599
Web: www.cwmee.com
Contact person: Cai Wei
2013 International Medical Instruments
and Equipment Exhibition
Date: March 26-March 28, 2013
Frequency: Yearly
Venue: China National Convention
Center
Exhibits: Medical instruments and
products, etc.
Tel: 86-21-61242365
Fax: 86-21-61242366
Contact person: An Yiheng
2013 China Chongqing The 21th International
Medical Device Exhibition
Date: March 24-March 26, 2013
Venue: Chongqing International Convention
and Exhibition Center
Exhibits: Medical care vehicles, medical
beds, operating tables, stretchers,
rehabilitation equipment, special
equipment for disables, etc.
Tel: 86-23-62817666
Packaging, Paper, Printing and
Publication
2013 Anhui Printing & Packaging Industry
Exhibition
Date: March 6-March 8, 2013
Venue: Anhui International Convention
and Exhibition Center
Exhibits: Printing machines, printing
materials, packaging machines, etc.
Organizer: Tarsus Hopes Anhui Exhibition
Co., Ltd.
Add: Rm 401 Block A Meidi Sunshine
Building No. 71 Jinzhai Rd,
Hefei, 230022
Tel: 86-551-3622510
Fax: 86-551-3639165
Contact person: Mr. Wang
The 20th China International Packaging
Industry Exhibition
Date: March 9-March 11, 2013
Frequency: Yearly
Year of the first event: 1994
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Packaging machinery, etc.
Add: No.15 Office Building, Trade
Fair Yard, No.117 Liuhua Road,
Guangzhou, Guangdong, China,
510014
Tel: 86-755-88265013
Fax: 86-755-82326252
Web: www.2456.com
China International Label Printing
Technology Exhibition
Date: March 9-March 11, 2013
Frequency: Yearly
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Label and narrow-web
screen printing machinery, etc.
Add: Rm 210, No.15 Building, Liuhua
Road, Guangzhou, Guangdong,
China, 510014
Tel: 86-755-88265013
Fax: 86-755-82326252
Web: www.sinolabelexpo.com
The 20th South China International
Printing Industry Exhibition
Date: March 9-March 11, 2013
Frequency: Yearly
Venue: Chinese Export Commodities
Fair Pazhou Complex
Exhibits: Pre-print treatment system
and software, digital printing and
sample print equipment, CTP technology
and equipment, etc.
Add: Rm 210, No.15 Building, Liuhua
Road, Guangzhou, Guangdong,
China, 510014
Tel: 86-755-88265013
Fax: 86-755-82326252
Web: www.sinolabelexpo.com
Media, Advertisement
2013 Guangdong International Advertising
Exhibition
Date: March 2-March 5, 2013
Venue: Guangzhou International
Convention and Exhibition Center
Add: Rm 1306, Fuji Tianhe Business
Tower, No.4 Huating Road, Linhe
East Road, Tianhe, Guangzhou,
Guangdong, China, 510620
Tel: 86-20-38106261
Fax: 86-20-38106200
Web: www.signchina-gz.com
Email: sign@trustexhibition.com
81

INFORMATION
2013
China Market
Suppliers List
Company name: Foshan Everlasting
Enterprise Co., Ltd.
Foshan Everlasting Enterprise
Co., Ltd., founded in 1972, is a sophisticated
international trading company
with wide range services. Our
convenient navigation guides you for
your success in searching competitive
products and filtering manufacturers.
Our various services bring you a total
solution for your success in international
trading business.
We have established long-term
and close business relationship with
hundreds of well-known manufacturers
and companies in the world. Our
clients cover more than 100 countries
and regions throughout Europe,
America, Asia, Africa and Middle
East. Our turnover for 2011 exceeded
$460 million.
Add: 31/F Jinghua Bldg, 18 Jihua
Wu Road, Foshan Guangdong Province,
China
Tel: 86-757-83033395
Fax: 86-757-83030366
Company name: Sunshow Mechanical
& Electrical Co., Ltd.
Shanghai Sunshow Mechanical
& Electrical Co., Ltd., as a specialized
generator manufacturer, is
localed in Songjiang Industrial park
of Shanghai. Robustly backed up by a
host of state-of-the-art facilities and
a huge factory building which boasts
one of the largest of its type in the
Chinese portable generator sector,
the Shanghai Sunshow put its focus
on refined production of home-use
generators and engines, with yet way
larger scales and varieties.
Our gasoline and diesel fueled
generators are enjoying words-bymouth
reputation of masterly technique
and uncompromised quality.
These remarkable products, provided
with a series of well-segmented power
outputs from 0.65 kilowatt up to 20
kilowatts, have been respectively certified
wih EPA, CE, Directive 97/68/
EC, SONCAP PC, ect. Tremendous
soaring of business can be anticipated
as an increasing number of customers
quite demanding for the product quality
start approaching to us, after they
have been aware that our generators
stay at premium level of the market.
Add: No 555, Zhaojiajing Road,
Chedun Town, Songjiang District,
Shanghai, China
Tel: 86-21-37601551
Fax: 86-21-37601177
Company name: Hangzhou Santiway
International Co., Ltd.
Hangzhou Santiway International
Co., Ltd. is an enterprise based
on the professional group of manufacturing,
design and export light-steel
sturcture workshop, space frame and
project structure. The main products
of the company are steel structure,
auto f ittings, gardening products
which including color coated steel
coil, steel roofing tile sheet, wall &
roofing corrugated sheet, floor decking
sheet, H beam, C&Z shape steel
purlin, sandwich pane, bolts and
screws, clips & brackets and etc.
We have a professional production
team, a great sales team and a
foresighted management team. We
have a modern manufacturing base
with the advanced digital control cutting
and automatic welding processing
line in the world. The products have
passed the UL. ETL, ISO9001 quality
authentication system. We treat
every order and every customer seriously
and kindly. In the process of
production, Santiway consistently
combines high quality with economical
efficiency to make sure every
customer get the products on time.
Santiway aims to establish a famous
brand and keep up with the development
of international steel structure
manufacture industry. It struggles
not only to be a large group across regions,
industries and nations but also
to be the top 10 steel structure brand
of China in the competitive market.
Add: Room 1104, Building 1
Zhidi Mansion, No. 77 Jincheng RD
Xiaoshan, Hangzhou, Zhejiang Province,
China
Tel: 86-571-22868118
Fax: 86-571-22868889
Company name: Guangdong
Evergain Chemical Co., Ltd
Established in 1994, Guangdong
Evergain Chemical Co., Ltd. is one
of the largest adhesive manufacturers
in China. Our company is headquartered
in Shunde, Guangdong. Our
factory is equipped with advanced and
safe facilities. For more than ten years
since our establishment, we have been
dedicated to R&D in production and
distribution in the adhesive industry.
Our company has successfully
achieved an average of 40% increase
in sales revenue year after year.
Our company specia lizes in
the development and production of
benzene-free all-purpose adhesives,
environmental-friendly adhesives,
nanotechnology emulsion adhesives,
silicone adhesives, and shoe adhesives.
In particular, the benzenefree
all-purpose adhesive is the most
popular product in China and is well
known for its nontoxic characteristic.
The mission of the company has
always been focus on good quality
environmental friendly adhesive. All
our products have passed the international
management system ISO9001
82

SUPPLIERS
and environmental requirement ISO
14001 and their non-toxic properties
have bee approved by China Environment
Department. Our products are
used in the National Stadium of Beijing
2008 Olympic Games and sold
to all over the world.
Add: District C, Shunde Industrial
Area, Xingtan Town, Shunde
District, Foshan, Guangdong Province,
China
Tel: 86-757-22898198
Fax: 86-757-26363268
Company name: Tianjin Light
Import & Export Co., Ltd.
Tianjin Light Import & Export
Co., Ltd., the core enterprise of
Tianjin Liho Group., is one of the
famous import and export enterprises
in China and has been certified by
ISO9001:2000. Tianjin Light currently
handles over 100 kinds of commodities
available in several thousand
specifications and designs, establishing
business ties with customers from
more than 100 countries and regions.
Annual amount of import and export
exceeds $100 million, mainly handling
stainless steel tableware, kitchenware,
enamelware, glassware, and
other kinds of household products.
Adhering to the principle of winning
over customers by good quality
of products and obtaining market by
satisfactory services, Tianjin Light is
trying to meet the needs of different
markets and customers.
Moreover, the corporation has
registered a number of trademarks
which are well known both at home
and abroad, including “Triangle”
Brand stainless steel tableware and
kitchenware, “Peacock” Brand enamelware,
“Plum Blossom” Brand glassware,
“Lion” Brand padlocks, “REN-
CA” Brand cooking stove, “Lark ”
Brand lighter, “Flying Fish” brand
fishing nets & twines etc. These products
are all deeply admired by Chinese
and foreign customers. It is an import
and export enterprise integrating production
and sale, possessing powerful
production bases for export.
In recent years, Tianjin Light
has set up more than 20 exportoriented
productive enterprises, like
Triangle Stainless Steel Tableware
Factory, Peacock Enamelware Factory
and Jinhua Garment Factory etc. by
way of investment, joint management
and cooperation etc., the total output
value exceeding RMB100 million.
Add: No. 9, Bin Shui Road,
Tianjin, China
Tel: 86-22-28377779
Fax: 86-22-28370068
Company name: Dalian Chem
Imp. & Exp. Group Co., Ltd.
Da l ia n Chem I mp. & E x p.
Group Co., Ltd. (Dalian Chem), established
in 1985, is a comprehensive
international trading corporation
with a registered capital of 20 million
yuan RMB. Nearly 100 professionals
of Dalian Chem are cooperating
closely with thousands of valuable
clients from more than 60 countries
and regions all over the world. With
a total annual turnover of over $100
million, Dalian Chem ranks higher
in the TOP 100 of Dalian import and
export enterprises.
As a core enterprise of Dalian
Chem Group, Dalian Chem passed
ISO9001:2000 Certification in 2002
and ISO9001:2008 in 2010. Dalian
Chem Group also invests in Dalian
Chem Taxi Co., Ltd., Dalian Kaizida
Car rental Co., Ltd., Dalian Kaixing
International Trade Company, Dalian
Kaishun International Forwarding
Co., Ltd. and Dalian Dancing Food
Co., Ltd. Dalian Chem is the member
of CCPIT, CCCMC. CCCMH-
PIE, CCCLA, CCCT, CCCFNA
and CCCME. Numerous rewards
have been given to Dalian Chem by
governments, organizations and associations
at different levels. Main Export
Commodities: chemicals, textile
and garments, foodstuffs, native produce
and animal by-products, light
industrial products and arts-crafts,
machinery and electronics and pharmaceuticals,
etc. Main Import Commodities:
chemical raw materials,
minerals, foodstuffs, daily necessities,
machinery and equipment and accessories,
etc.
Add: Chem Bldg., No. 61 Renmin
Road, Dalian China.
Tel: 86-411-82807789
Fax: 86-411-82630088
Company name: SUMEC Group
Corporation
SUMEC Group Corporation
(SUMEC), founded in 1978, is a
key member of the China National
Machinery Industry Corporation
(SINOMACH). Through years of
exploration and innovation in an increasingly
globalized economy, it has
become one of the largest import and
export enterprises in China. SUMEC
has long adhered to a market-oriented
approach, and continuously invested
in the building of its market, technology,
and production capacity.
It has a professional technical
and marketing team, research and
development centers, testing centers,
and its own factories for manufacturing
core products; it also has over 30
member companies. The main business
scope of SUMEC involves shipbuilding;
complete equipment projects;
research and development, manufacturing
and export of machinery
and electric products such as power
tools, garden tools, power machinery;
design, manufacturing and export of
textiles, garments and light industry
products; the import of production
materials and technological equipment.
It also covers international
tendering for machinery and electric
products, technological development,
and industrial investment. SUMEC
is dedicated to providing quality
products and service to the world
market, taking a win-win approach to
optimize benefit to customers.
Add: SU MEC Building,198
Changjiang Road, Nanjing, Jiangsu
Province, China
Tel: 86-25-84511888
Fax: 86-25-84411772
(Source: Canton Fair Online)
83

Feature
Lifestyle
By Guo Yan
Cabbeen shows different roles full of
exoticness
Cabbeen Men’s Collection brought three
collections: Cabbeen leisure clothing, Cabbeen
urban men’s clothing and Cabbeen fashionable
clothing at 2013/2014 S/S.
Cabbeen leisure clothing — Surfing in
Hawaii: The theme is the powerful return
of exoticness in the trend. Palm
and exotic flowers are influenced by
the spirit of Pacific ocean, namely
the culture of Polynesia and Hawaii,
Tiki (the human ancestor in
Polynesian myth), totem, lucky
charm, Polynesian tattoo and the
surfing picture and Hawaii lifestyle
in the vintage and modern
1960s.
Cabbeen urban men’s clothing
— Architecture VS Fashion:
Cabbeen urban show S/S 2013
plays about some basic factors, like
lines, shapes and structure, and studies
how they combine the architecture
with fashion in modern urban context.
Cabbeen fashionable clothing--
Desert Journey: It is from the legendary
experience of Antoine de Saint-
Exupery, an aviator, who wrote the famous
novel Little Prince. Starting from
the author’s experience and background,
the design portrays an adventurous desert
journey, and what he has seen and heard
from west to east during the journey is
blended into the design.
84

Feature
Join the Rio Carnival from Brazil with
Dorian Ho Collection
Asahi Kasei · Creative awards — Dorian
Ho works show held in the Golden Hall of
Beijing Hotel in October of 2012. As the first
winning designer from Hong Kong, Dorian Ho
brought an exotic works show to the audience,
based on the theme “Midsummer Fiesta” and his
joining instill the fresh fashionable creativity to
the “Asahi Kasei · Creative awards”. The inspiration
of Dorian Ho’s works show was oriented
from Rio Carnival, a celebrated event in Brazil.
Latin American culture integrated is full
of modern sense. In choosing textile materials,
he used a lot of woven cotton sewed up
with golden and silver lines, pure silk satin,
silk chiffon and knitted fabric to present the
high fashionable taste. Besides, painted chiffon
from rainforest, the lace and grenadine
created the sense of depth and profusion
effects. In clipping and those lines, classical
beauty and fashion sense are tactfully
bent in the way of cliiping. Thus could
present and highlight oriental women’s
charm. Many kinds of vivid and fresh
colors, such as coral, peach, maize yellow,
emerald-green, turquoise blue
were used and formed unique and
featured works during the “midsummer
fiesta”, together with
brisk white, apricot and brown.
Viewing the details, Dorian
Ho, the designer, fastidiously
applied SWAROVSKI
Crystal and pearls into the
accessories, which is the
best manifestation in
binding and embroidery.
The match of different
colorful feathers and
shining crystals and the
sharp contract between different
materials may further
create a dynamic and
orchestic atmosphere.
85

Feature
Lifestyle
Scandinavian style through J.Lindeberg Men’s
Collection Show
J · Lindeberg menswear conference interprets the most
amazing design: do not look back, also do not deliberately try
to transcend the future. Only try to do best now, cherish and
appreciate every moment of present. Since the Scandinavian
style run through every series, the earth color is given a priority
as the major color. From solid rock black to dynamic soil
red, to blue and stone gray, smooth lines and simple appearance,
the design is without any redundancy.
There is no quick fashion in J · Lindeberg. We only do
designs that stand up to the time testament. They may be
cotton T-shirt, exquisite wool cardigan, excellent suit and
fit leather jacket suitable for everyone. We also hope that
our customers have such a delicate requirement, making us
bring their new expectations in each season.
WOLFZONE leads a new adventure with the jeans
style.
The theme of WOLFZONE Liu Yiqun Collection is “Return
Home”. The designs mix haleness and exquisite, and continue ancient
and color-mix jeans style. The indestructible, budding “tannin
power” leads people full of hope and passion to start a new adventure
journey.
The colors are bright pink, bright yuppie-style, neon, yellow,
mint green, and raspberry. And for craft, the style sewed by pixelated
simple design and clean line, changeable indigo blue pattern and
double-sided fabrics, give a new and fresh feeling to hit jean product.
the opposite side products has bold primary color printing. Its geometric
contrasted-color setting, pocket cover, collar and welt pocket with light
bright color, multicolored silk cotton lace and colourful tribal customs
lace added new highlights for curl edge of whole product and decorative
edge of pocket, making a strong contrast among edge details, and presenting
a fresh and modern effect.
Ancient square woven pants, chambray fabrics, transformative
ikat printing, sewn bandanna printing, fuzzy color piece, parallel herringbone
twill, contracted-styled fabric as a margin and the contrasted
color, GunBian adds the contemporary feeling to vintage-style gentleman
pajamas details.
86

Feature
VanCamel Hui Wenlong sings the ‘LOVE&PEACE’
VanCamel Hui Wenlong Men’s Collection is inspired by the 1960s American
rock singer Bob Dylan’s masterpiece “Knockin’ On Heaven’s Door” which
expresses the anti-war and peace appeal idea, so the theme is LOVE&PEACE.
This song has been singing by many other singers. The diverse styles and genres
lifts different tide, as the styles,colors, shell fabric, craft and decoration of this
collection, reflecting the attitude towards love and peace.
In color choices, deep gray and white through all the collection shows war
haze and victims’suffering and the subcolor(rose pink, sky blue, light green and
bright yellow) convey the life happiness and deliver the thirst for love and peace.
In shell fabric aspect, the designer chooses cotton, linen, silk, wool and leather to
be the major material to explain the theme. He gives an interpretation of the life
contrast between war and peace from a special angle. In craft aspect, the collection
adapt wrinkle, knit, perforation and beading to highlight the panic of the war and
people’s complicated mood. Also the usage of asymmetry and carline to embody the
people’s unsatisfactory attitude to the war and turbulent days and resistance.
SEC Qi Gang pains heroine image
from Rome by mixed colors
SEC Qi Gang Collection was themed as
Rome. The inspiration comes from solider in
ancient Rome battlefield, ancient Rome architecture
and TV drama Spartacus. The heroine
image of this season is bold, courageous and
resolute and is brave in following her desire.
Thus, with sharp color and lots of printing, the
new design use the dark green and purple as the
main color, treat the stream red and rose pink as
the theme with feminine hue, and also incorporates
the transition of pale apricot and fluorescent
yellow. The printing begins with orange
blue vintage Roman iris, then follows
the gradual change of green mixed with
leopard-print design, indicating the
master’s style, of which, light green
serpentine print signifies desire and
wildness, spray painting and Tang
Dynasty rhyme printing indicates
the spring scenery artistically by the skill
of splashed-ink and render, and leopardstripe
face cloth and colorful finches picture
deliver the queen air.
87

THIS IS
HINA
Shang Dynasty Ruins Oracle Bone China Museum of Characters
Travel by Beijing-Guangzhou
High-Speed Train II
By Lesley Cui
Anyang
Hebei
Beijing
Henan
Anyang — Heart of China’s
Beginnings
Located in the northern tip
of Henan Province on the Beijing-
Guangzhou Railway, Anyang is an
ancient city with a history of over 3,000
years. As one of the earliest centers of
Chinese civilization, it is named as one
of the Eight Ancient Capitals of China.
The remains of some of the earliest
human settlements - primitive caves of
25,000 years ago - have been unearthed
here. And the city was the capital of the
Bronze Age Shang Dynasty between
1554 and 1045 BC.
The city has a total population
of about 5 million, 2 million of whom
live in the metropolitan area made of 4
urban districts. On the west it borders
Taihang Moutain, and is on the waters
of the Zhang River in the north, and
connects with the Eastern China Plain
on its south-eastern border. The city
is chilly in winter and hot in summer,
therefore, spring and autumn are the
best seasons to visit.
History
The prehistoric human caves of
Xiaonanhai on the western side of Anyang
were a site for humanity in the old
stone age 25,000 years ago. Over 7,000
stone tools and animal bone fossils that
were used by mankind have been unearthed
here. The area has been named
“Xiaonanhai Culture”.
Over 4,000 years ago, the sagekings
of Zhuanxu and Diku established
their capitals in the borders of Anyang;
each reigned for over 70 years. In present
day Sanyang Village there are two
mausoleums in memory of Zhuanxu
and Diku.
In the 14th century B.C., the king
of the Shang Dynasty Pangeng moved
the capital to Yin, the present day village
of Xiaodun, and established the
first stable national capital in Chinese
history.
Oracle bones
For centuries, the secret of Anyang
lay hidden beneath the city streets. But
in 1899 an official under the Qing Dynasty
fell ill and was prescribed “dragon
Hubei
Hunan
Guangdong
88

The Ma Family Mansion
Wenfeng Pagoda
bones”. These “dragon bones” turned out
to be tortoise shells with strange carvings
on them. After careful study, scholars concluded
that they were written records from
about 3,000 years earlier.
Full scale excavations at Anyang began
in 1928, which uncovered the remains
of a royal palace, several royal tombs, and
a huge number of bones and shells covered
with words. 4,500 characters have been
counted and 1,700 have been deciphered.
They show that the people of the Shang
Dynasty had a well-structured script with a
complete system of written signs.
The Shang rulers used divination to
ask the gods about the future. The inscriptions
therefore, were concerned with predicting
the future. Either a pointed, heated
rod was applied to the shell or bone and a
crack formed or a hole was drilled on the
interior side of the shell and it was put on
a fire to see where cracks would appear on
the other side. By interpreting the cracks a
soothsayer predicted the answers to questions
including: what the weather was going
to be like, if it would flood or not, if the
harvest would be successful, whether one
should take a journey, and how things were
in the Shang society.
Shang Dynasty Ruins
Located about 2 km northwest of Anyang
are the ruins of the Shang Dynasty
capital known as Yin. Large-scale excavation
has been going on at this site since
1899.
Archaeologists have discovered ruins
of the imperial palaces of the Shang Dynasty
as well as large tombs of the royal
families of that period. Large numbers of
bronze ware, tools and articles for production
and daily use have also been found
here. A rectangular pot 1.33 meters high
Linlu Mountain
and weighing 875 kilometers, with beautiful stylized dragon
and legendary animal patterns inscribed on its four sides, is a
rare bronze object in the world.
The site is inscribed on the UNESCO list of World Heritage
Sites.
Wenfeng Pagoda
Wenfeng Ta (Literature Peak Pagoda) is believed to have
been constructed in 925. The current pagoda was constructed
during the Ming Dynasty. The five-story dark red brick octagonal
tower is 38.65m high and is, unusually, larger at the top
than the bottom and is topped with a 10m Lamaist stupa-style
dagoba steeple.
The pagoda stands on two-metre-high stone pedestal and
is decorated with multi-eave pent roofs and carvings of Buddhas
and bodhisattvas. The unique pagoda is the symbol of Anyang.
Besides, Anyang is famous for the Ma Family Mansion,
Tianning Temple, China Museum of Characters, to name a few.
Anyang also has beautiful natural scenery - the Taihang Linlu
Hill Scenic Area on the 400-kilometer Taihang Mountains and
the Red Flag Canal.
89

THIS IS
HINA
Hebei
Beijing
Songyang Academy
Shaolin Temple
Zhengzhou
Henan
Hubei
Hunan
Guangdong
Zhengzhou — Capital of Henan
Province
Zhengzhou is a city on the south
bank of the Yellow River in China.
It is the capital of Henan Province.
Sometimes it is called the Green City,
for the number of trees it has.
The area remained unimportant
until it was selected for development by
the Chinese Government after 1949.
Since Zhengzhou was handpicked to
serve as a transportation hub - and
does not have a very long history as a
large city - the urban planning is more
noticeable here than in other places of
China. There is plenty of green space,
tree-lined streets and logical arrangement
to the city.
Strategically located in the center
of the country, Zhengzhou is now a
major transportation hub and rapidly
growing city. To travelers, Zhengzhou
is a convenient start point to explore
a series of Chinese cultural sites, like
Kaifeng and Luoyang.
Erqi Square
The city’s focal point is Erqi
(February 7) Memorial Square. This
large public square comes alive at
night, when an entire market fills the
space with vendors and locals hanging
out. From the square, several main
streets fan out to different areas of
the city.
Shaolin Temple
About two hours from
the Zhengzhou city proper,
Shaolin Temple is a Buddhist
temple on Mount
Song. Founded in the
fifth century,
the monastery
is long famous
for its association with Chinese martial
arts and particularly with Shaolin
Kung Fu, and it is the best known
Mahayana Buddhist monastery to the
Western world.
Songyang Academy
The Songyang Academy was one
of the highest academies in the Song
Dynasty. As a private school, it was
constructed away from towns and cities,
offering a quite environment. It
was built in the Northern Song Dynasty
in 484. Famous scholars of the
time such as Cheng Hoa, Cheng Yi,
Sima Guang, Fan Zhongyan and Zhu
Xi once gave lectures here.
In history, Songyang Academy was
jointly dominated by Buddhism and Daoism
at first, later by the Confucianism exclusively.
It was famous for its rationalistic
Confucian philosophical school.
Stellar Observatory
90

The Yellow River
Zhengdong New District
Erqi Square
Stellar Observatory
Located in Gaocheng Town within
the administration of Zhengzhou, the
Stellar Observatory was built by Guo
Shoujing, an astronomer of Yuan Dynasty,
in 1276. It is the oldest such observatory
in China, and is also one of the
most famous examples of astronomical
architecture in the world.
The observatory stands 12.62 meters
high, and allowed Guo Shoujing to calculate
the accurate length of a tropical year.
This allowed Chinese scientists to set up
a whole new system of exact dates and
times, allowing for increasingly accurate
recording of history and a sense of continuity
throughout the country.
Zhengdong New District
The new district has been developing
rapidly since it began construction
in 2003. It has been divided into 6
functional regions, including Central
Business District, Commercial Logistic
District, Dragon Lake District, Longzihu
District, Science and Technology
Park District and Economy and Technology
Development District.
As the heartland, the CBD is composed
of 60 high-rise buildings, covering
an area of 3.45 square km. Three representative
buildings are included here—
the Zhengzhou International Convention
and Exhibition Center, Henan Arts Center
and the Zhengzhou Convention and
Exhibition Hotel.
119 financial institutions had moved
into the CBD, making the area highly
competitive in financial services. And a
large number of international brands have
entered the area, such as Ferrari, Rolls-
Royce and Sheraton.
The district attaches great importance
to environment protection, with
flora coversing roughly half of the entire
district.
91

Spring Festival Memoir:
In the Defense of Experiencing
“Chun Yun”
By Katie Burkhardt
Word on the street might
have you shaking in your
shoes when it comes
to traveling during the
Spring Festival. During “Chun Yun”
(lit: Spring Festival rush), China is in
a state of complete and utter of chaos.
People are everywhere; scrambling to
get tickets, rushing to buy last minute
gifts, and packing incredible amounts
of luggage for the long journey home.
And oh the luggage they do bring. I’ve
seen rice cookers, oscillating fans, water
dispensers and enough insulated clothing
to choke a horse. Anyone who has
spent this holiday in China and braved
the traveling masses will certainly have
a story to share. While these stories
might scare you into planning a “staycation”
in your cozy Chinese dwelling,
you might want to think twice.
Although a dreadful time to
travel, the Spring Festival is truly a
wonderful time of year. Traditions
run deep, food is aplenty, and family
members venture from afar to spend
time with the ones they love. I have
had the pleasure of celebrating a few
Spring Festivals with Chinese families
and have enjoyed each and every one,
despite the overwhelming crowds and
claustrophobic moments. My advice to
you: don’t let the rumors turn you away
from traveling this holiday season. For
me personally, the madness has actually
proved to be quite eye-opening and
dare I say…enjoyable.
Making the best of a travel
nightmare
A particular area that gets especially
complicated during the Spring
Festival is travel. This isn’t surprising; it
hasn’t been coined the “largest annual
human migration in the world” without
reason. Whether flying, traveling by
train, bus, or driving; expect challenges,
but persevere. The best case scenario
would be to book your plane tickets
months in advance at a reasonable price.
Unfortunately, this has never been a realistic
option for me since my employer
operates on a last-minute basis when it
comes to announcing holidays. If you’re
luckier than me, you can conveniently
book tickets online, with no pre-sale
limitations. As the holiday approaches,
tickets get quite expensive, and there’s
not a discounted flight to be found. If
you or your travel companions aren’t
willing to cough up the cash, taking
the train is the next best option. This is
where the situation gets messy.
Although traveling by train is
increasingly convenient — there are
several new high-speed lines that run
throughout the country as well as
new regulations that make it slightly
easier to buy train tickets for the
holiday — this type of travel can still
mean waiting in lines and sold out tickets.
If high speed trains aren’t an option
for you, the older trains aren’t bad either,
providing you don’t mind dealing
with not-so-pleasant folks packed like
sardines on a train for several days. If
you’re lucky you might even get stuck in
a sleeper car infested with cockroaches!
Yuck. But on a serious note, if you’re
thinking about travelling by train, plan
ahead. Although there is now a 20-
day window for booking tickets, they’ll
go faster than sunbonnets at a Chinese
beach.
So what if you can’t find tickets, but
still want/need to travel? I found myself
in this very situation last year. With no
train tickets available and flights incredibly
expensive, there was no other option
than to “hitch a ride”. Well, there was
the sleeper bus alternative, but
after my last experience involving
bodies in aisles and Chinese police,
this was obviously vetoed. So yes, I traveled
from southern China to central
China by car during the craziest travel
time of the year. Let me tell you, the
highways and traffic jams were a sight
to behold. A trip that should have taken
around 12 hours took more like 24. As
you can imagine, traffic was backed up,
often coming to a stand-still with people
getting out of their cars to stretch and
snack, which, in turn, resulted in massive
amounts of litter and orange peel
scattered everywhere. And Chinese rest
stops, oh my. The smell of instant noodles
being brewed by restless travelers
lingered about in the air. The restrooms
(if you can even call them that) could not
be described using words.
Actually, now that I think about it,
I wouldn’t mind reliving that adventure.
It’s the moments like those that I love;
moments that make you appreciate the
life you’ve chosen. If you’re up for it, ask
92

a Chinese-speaking friend to help you
check www.58.com to find ride share
opportunities headed to your destination.
It’s cheap and definitely unforgettable!
If you’re concerned about safety,
it would be best to meet the other party
beforehand. I traveled with a lovely
young couple that was simply looking to
save money on fuel and we became quick
friends during the journey.
Spending some quality time
with the family
Once you’ve made it to your destination,
drop your luggage and get ready
to party! Well, perhaps not the type of
party you’re thinking. The Chinese
New Year is filled with age old
traditions and time spent
with family. For those celebrating
with a Chinese
family, you can expect
a lot of food and
incredible hospitality.
Bear
in mind, it
is polite
a n d
often
expected
for family
members
and guests to
arrive bearing
gifts. Visit any supermarket
this time
of year and you’ll find
a variety of gift boxes, nuts,
dried fruits and chocolates, all of
which are suitable for gift-giving.
According to Chinese tradition, reds,
oranges, and yellows are colors that create
warmth and excitement. Thus, oranges
are often given to arriving guests
as a warm welcome.
Although every family celebrates
the festival a bit differently nowadays,
there are a few traditions that seem
fairly common throughout the country.
Of course, the traditions run far deeper
than my non-Chinese self is able to
describe, but from my experience, the
most important days are New Year’s
Eve and the first few days of the New
Year. Generally, families will gather
for a tremendous feast on the eve of the
Chinese New Year. Following the meal,
the nation tunes in to watch the Chinese
New Year’s Gala. Young people
even enjoy ringing in the New Year at a
bar or club, with “crowded” describing
the environment lightly. Depending on
where you are in the country, prepare
yourself (have your cameras ready!) for
the roar of fireworks when the clock
strikes midnight. During the first few
days of the New Year, families travel
around to relatives’ homes to pay a New
Year’s visit, drink tea, snack, and chat.
During the evenings, some families
gather for a game of mahjong. This,
for me, means staring blank-faced at
the table while being hypnotized by
the melody of the rustling tiles. I really
need to learn how to play.
If you’re joining a family celebration,
come ready to eat. Food is central
to the holiday and meat is particularly
abundant, symbolizing a precious reward
for the hard work and struggle
throughout the year. You’ll undoubtedly
have the opportunity to try many
types of food and parts of animals that
you didn’t even know existed. The look
on my face must have been priceless
when an entire “messenger bird” aka
pigeon was dropped into my bowl.
How to handle such a situation? Pretend
to enjoy it and then discreetly discard
it when no one’s looking; no one
will mind. A fish will often be served
at family meals during the New Year,
but not eaten. This is a reminder to
always leave a little bit remaining. The
pronunciation of the words “fish” and
“surplus” are the same in Chinese (yú),
thus giving rise to the importance of
fish in both food and decoration during
this time of year.
Honestly speaking, I look forward
to the Spring Festival each year.
As much as I would like to hibernate
in my apartment in front of my space
heater watching Sex and the City reruns,
it’s nice to get out and experience
what China is really about. People
work and anticipate the entire year for
this moment. It means the world to
them and as guests in their country
we should grant it the same respect.
Next time you are graciously invited
to a Chinese New Year’s gathering,
be honored, for they are opening their
home and time-honored tradition to
you. Turning down the opportunity
to experience the spirit of the season
would be downright sad. The holiday
is long, the opportunity is rare, and
you’ll have plenty of time to recuperate.
Enjoy your Spring Festival!
(Source: eChinacities.com)
93

Culture
qiān
千
zì
字
wén
文
Part 2 Principles
The Thousand
Character Classic
(II)
The Thousand Character
Classic ( 千 字 文 qiān zì wén) is
an ancient Chinese poem used as a
primer for teaching Chinese characters
to school children. It contains
exactly one thousand unique characters
and is composed of 250 phrases
of 4 characters each. It is said that
Emperor Wu of the Liang Dynasty
(502-557) commissioned 周 兴
嗣 (Zhōu Xīngsì) to compose this
poem for his prince to practice calligraphy.
The writing of characters
in the original version was selected
among the calligraphies of 王 羲
之 (Wáng Xīzhī), one of the finest
calligraphers in China. It was sung
in the same way in which children
learning Latin alphabet writing do
with the “alphabet song”. The characters
of the poem were sometimes
used to represent the numbers from
1 through 1000.
The poem can be divided into
four parts according to its topic
focus. The first part is to tell the history
from the very beginning. The
second part is setting principles on
how to behave in daily life. Then it
describes the life in the capital city
and upper class in the third part; and
rural and citizens’ life in the fourth
part. Culture column has shared the
Part 1 History and some of the Part 2
Principles in the January issue. Here
we have the rest of the Principles
part, and the Part 3.
※ 笃 初 诚 美 , 慎 终 宜 令
dǔ chū chéng měi, shèn zhōng
yì lìng
Beginning well is surely good;
But keeping fine through is what you
should.
※ 荣 业 所 基 , 籍 甚 无 竟
róng yè suǒ jī, jí shèn wú jìng
To build yourself that is to be,
Do honor and it endless see.
※ 学 优 登 仕 , 摄 职 从 政
xué yōu dēng shì, shè zhǐ cóng
zhèng
Achieve in learning a chance
to create, To work on a government
post for the state.
※ 存 以 甘 棠 , 去 而 益 咏
cún yǐ gān táng, qǜ ér yì yǒng
Like Duke of Zhao for whom
the cheers. Grew louder with the
passing years.
※ 乐 殊 贵 贱 , 礼 别 尊 卑
lè shū guì jiàn, lǐ bié zūn bēi
There’s music for high and
music for low; The rites are built on
ranks, you know.
※ 上 和 下 睦 , 夫 唱 妇 随
shàng hé xià mù, fū chàng fù
suí
Through high and low let harmony
grin; When husband sings let
wife join in.
※ 外 受 傅 训 , 入 奉 母 仪
wài shòu fù xùn, rù fèng mǔ yí
Obey your master wherever
you roam, But follow Mother’s
words at home.
※ 诸 姑 伯 叔 , 犹 子 比 儿
zhū gū bó shú, yōu zǐ bǐ ér
Like parents aunts and uncles
are near; The nephews you hold as
your own born dear.
※ 孔 怀 兄 弟 , 同 气 连 枝
kǒng huái xiōng dì, tóng qì
lián zhī
And love your brothers for parents’
sake, From whom you sprang
with all their make.
※ 交 友 投 分 , 切 磨 箴 规
jiāo yǒu tóu fēn, qiē mó zhēn
guī
On common grounds you
choose your friends, On bettering
morals, nobler ends.
※ 仁 慈 隐 恻 , 造 次 弗 离
rén cí yǐn cè, zào cì fú lí
With pity or mercy you proceed,
And never leave a brother in need.
※ 节 义 廉 退 , 颠 沛 匪 亏
jié yì lián tuì, diān pèi fěi kuī
Be upright and modest to moral
perfection, And none the less even in
dejection.
※ 性 静 情 逸 , 心 动 神 疲
xìng jìng qíng yì, xīn dòng
shén pí
A tranquil nature gives you
ease, But when obsessed you never
have peace.
※ 守 真 志 满 , 逐 物 意 移
shǒu zhēn zhì mǎn, zhú wù yì
yí
Remain unspoiled, with worth
life fill; Pursuit of lust will weaken
will.
※ 坚 持 雅 操 , 好 爵 自 縻
jiān chí yǎ cāo, hǎo jué zì mí
And have your honor your
prime concern. Till honor comes to
dwell in turn.
94

well-known, Are praised in inscriptions
on bronze or stone.
Part 3 Life in Upper Class
※ 盘 溪 伊 尹 , 佐 时 阿 衡
pán xī yī yǐn, zuǒ shí ā héng
The fisher at Pan stream, and Yi
with his wit, Each rose to his times and
did his bit.
※ 都 邑 华 夏 , 东 西 二 京
dū yì huá xià, dōng xī èr jīng
Two royal towns in flowering Cathay,
One east, one west; full grandeur
display.
※ 背 邙 面 洛 , 浮 渭 据 泾
bèi máng miàn luò, fú wèi jù
jīng
One mount-backed where the Luo
waters sing, One washed by the streams
where the Wei takes the Jing.
※ 宫 殿 盘 郁 , 楼 观 飞 惊
gōng diàn pán yù, lóu guān fēi
jīng
The palace ways bewilder the
sight, And the eaves of the towers seem
in breath-taking flight,
※ 图 写 禽 兽 , 画 彩 仙 灵
tú xiě qín shòu, huà cǎi xiān
líng
With colorful paintings of bards
and beasts, Immortals, spirits, gods,
and priests!
※ 丙 舍 旁 启 , 甲 帐 对 楹
bǐng shè pang qǐ, jiá zhàng duì
yíng
The wing rooms open by the central
hall, With the columns, curtains,
pearl-strings and all.
※ 肆 筵 设 席 , 鼓 瑟 吹 笙
sì yán shè xí, gǔ sè chuī shēng
When banquets are held, the music
will be played, And the zither and
the sheng tunes rise or fade.
※ 升 阶 纳 陛 , 弁 转 疑 星
shēng jiē nà bì, biàn zhuàn yí
xīng
As men ascend the steps, how fine
— Like twinkling stars their hat-gems
shine!
※ 右 通 广 内 , 左 达 承 明
yòu tōng g uǎng nèi, z uǒ dá
chéng míng
The Broad Interior leads to the
right, The house on the left's called Carrying
Light.
※ 既 集 坟 典 , 亦 聚 群 英
jì jí fén diǎn, yì jù qún yīng
The one keeps classics of all ages;
The other, scholars, heroes, sages.
※ 杜 稿 钟 隶 , 漆 书 壁 经
dù gǎo zhōng lì, qī shū bì jīng
The masters' writings are graceful
and adept, In paint or like classics
inside the walls kept.
※ 府 罗 将 相 , 路 侠 槐 卿
fǔ luó jiāng xiàng, lù xiá huái
qīng
The dignitaries posted the imperial
abode, And lined His Majesty's
touring road.
※ 户 封 八 县 , 家 给 千 兵
hù fēng bā xiàn, jiā jǐ qiān bīng
Their fiefs each covered counties
eight, With thousands of servants on
them to wait.
※ 高 冠 陪 辇 , 驱 毂 振 缨
gāo guān péi niǎn, qū gǔ zhèn yīng
In tall hats they followed in imperial
tours through; With the rolling of
carriages the leather straps flew.
※ 世 禄 侈 富 , 车 驾 肥 轻
shì lù chǐ fù, chē jià féi qīng
Great place age-old sees riches pile,
And travels in most luxurious style.
※ 策 功 茂 实 , 勒 碑 刻 铭
cè gōng mào shí, lè bēi kè míng
Their arts of war and peace
※ 奄 宅 曲 阜 , 微 旦 孰 营
yǎn zhái qū fù, wēi dàn shú yíng
And think of Qufu, the town near
Yan — Who could make it thrive but
Dan?
※ 桓 公 匡 合 , 济 弱 扶 倾
Huán gōng kuāng hé, jì ruò fú
qīng
Duke Huan assembled heroes of
the day, And propped the Zhou house
lest it'd decay.
※ 绮 回 汉 惠 , 说 感 武 丁
qǐ huí hàn huì, yuè gǎn wǔ dīng
Emperor Hui had the Hoary Four,
And Yue helped King Wu Ding of yore.
※ 俊 义 密 勿 , 多 士 实 宁
jùn yì mì wù, duō shì shí níng
Thanks to efforts of righteous men,
The nation was back to peace again.
※ 晋 楚 更 霸 , 赵 魏 困 横
jìn chǔ gēng bà, zhào wèi kùn héng
Then Jin and Chu by turns prevailed,
And Zhao and Wei were cunningly
assailed.
※ 假 途 灭 虢 , 践 土 会 盟
jiǎ tú miè guó, jiàn tǔ huì méng
One march by guile, two states
were stormed; One sworn alliance, a
leader was formed.
※ 何 遵 约 法 , 韩 弊 烦 刑
hé zūn yuē fǎ, hán bì fán xíng
While Xiao He followed the
Three-point Rule, Han Fei was caught
in his statecraft tool.
※ 起 翦 颇 牧 , 用 军 最 精
qǐ jiǎn pō mù, yòng jūn zuì jīng
General Bai Qi and a few more,
Displayed miraculous art of war.
(To be continued)
95