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ZPMC moves into rail, wind power

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A Shanghai Zhenhua Heavy Industry Co employee supervises the loading of containers at Shanghai port. The company has a 70 percent share of the global port equipment market. [Zhang Haifeng / China Foto Press]

Shanghai Zhenhua Heavy Industry Co (ZPMC), the world\’s largest port equipment maker, is planning to expand into the nation\’s high-speed railway and wind power sectors, making them its new growth engines, company President Kang Xuezeng said on Friday.
"Our next step is to apply our home-grown electric control systems and gearboxes to the two rapidly growing industries," said Kang.
Representatives of China South Locomotive and Rolling Stock Industry (Group) Co (CSR) attended a promotion conference on ZPMC\’s gearboxes, spreaders and drives in Nantong, Jiangsu province, on Friday.
CSR, the country\’s largest trainmaker, is the manufacturer of "China Star" and "Central China Star" high-speed trains.
"The market demand for high-speed rail is huge, and we are very interested in participating in this sector," said Kang.
"It\’s no surprise that ZPMC\’s has ambitions in this sector, as most of its products used in ports are compatible with high-speed trains," said Zhang Zhongjie, an industry analyst at Essence Securities.
China plans to build 16,000 km of high-speed rail lines by 2020, according to the Ministry of Railways. Forty-two high-speed rail lines totaling 13,000 km will be completed by 2012.
Kang also said ZPMC is currently in talks with several firms to develop gearboxes that can be used in the wind power sector.
ZPMC\’s key businesses, including yard and quay cranes, were hit hard last year as port operators and shipping firms cut capacity due to the global financial crisis.
ZPMC has a 70 percent share of the global port equipment market, according to Kang.
ZPMC forecast in its annual report to the Shanghai Stock Exchange that its net profit would decline by up to 70 percent in 2009. The barge crane manufacturer posted a net profit of 2.55 billion yuan ($374 million) a year earlier.
The market value of the port-related sector declined 60 percent during the financial crisis, Kang said.
The company said that sales of its Global Positioning System products used in yard cranes dropped to 44 units in 2009 from 127 in 2008.
"We received more contracts during the first months of 2010 compared with the previous year, but difficulties will continue(therefore), we have to adjust our product structure this year, aiming to speed up the promotion of home-grown components with cutting-edge technologies and high added value," Kang said.
Essence\’s Zhang pointed out that the profit margin of components is about 20 percent, compared with 8 percent for yard cranes and 15 percent for quayside cranes.
According to Kang, components, most of which are currently made by foreign firms, account for half of the costs of integrated port equipment.
"We will make more efforts in developing components to cut the overall costs and in turn, improve our competitive edge," he said.
But the components market will take time to grow, and may not see a profit in the short term, Kang said.

http://www.chinacourse.com

Comment: Can China live without Google?
The media\’s mass coverage of Google\’s retreat from China showcased a war between the biggest search engine company and the biggest Internet market in the world. The Washington Post issued a report on Friday with the headline, "For Chinese people, loss of Google would mean \’nothing but darkness\’", which shows the deeply embedded ideology behind the curtain.
According to the report, Google, which has taken a one-third share in the Chinese Internet market, has become deeply rooted in the country and is now a necessity. It said if China refuses to make compromise to Google, it would become marginalized and be an outcast in the world.
The report is interesting. If Google has generated such a compelling power in China, big enough to leave the country fumble in the dark after its retreat, the thing definitely can be regarded as a shocking cultural clash between the West and the East and the Chinese government cannot afford to sit by and watch.
The Reform and Opening-up policy in China has been carried out for 30 years since 1979, with earlier icons like Coca-Cola, and later McDonald\’s, KFC and Starbucks Coffee.
The incoming Western goods also brought Western cultures and lifestyles. For instance, the biggest Internet retailer Amazon named its service in China Zhuoyue (excellence).
The albums of the US pop star Lady Gaga and Britain\’s talent Susan Boyle fly off the CD shelves in China.
All commodities come with some cultures and ideologies. China definitely is influenced by the West, but the influence is mutual. People of a certain culture learn to know a different new thing, but the new thing also has to learn to suit its new customers. That\’s why KFC serves Chinese porridge and McDonald\’s provides Chinese food menus here.
It all shows that China never rejects Western culture, but not all Hollywood movies will be a hit in China like "Avatar".
Google arrived in China in 2005; it got its Chinese name "Gu Ge" and Chinese domain name Google.cn the next year. Google then made some compromises to adjust to a different business environment. However, it tried to change the rules after it had gained an "irreplaceable" position in China, i.e. demanding the Chinese government change Internet regulations at their request. Google was confident that China would make some concessions.
Google thought it has already "dominated" many Chinese people\’s lives, no matter how many more Chinese use Baidu, a local search engine.
I\’m not sure if Google knows that its arrogance can easily remind the Chinese people of the "big powers" who cracked open China\’s door by warships and cannons in the 19th century. The reason those invaders could make the Qing government sign unfair treaties is that they owned advance weapons that China didn\’t have. The Washington Post refuted such association by claiming that it was just an unfriendly propaganda by the Chinese government. The reporter of the Post or even Google didn\’t understand that they had been on the road of the big powers again. The only difference was military weapons in the past and Internet service today. The Post has very likely gotten to the nerves of the Chinese government.
Chinese Premier Wen Jiabao once talked about China\’s foreign policies when answering questions from Singapore\’s Lianhe Zaobao. Wen said the Chinese people have suffered a lot in the past 500 years, and that\’s why they have such strong feelings for their country\’s independence, sovereignty and territorial integrity.
China\’s top leaders have a constant policy that stresses opening up to the world. But Google has challenged the Chinese government\’s sovereignty by demanding the government accept Google\’s presumed definition on "opening up". China has always been in a developing mode that shows no signs of stopping.
Ed Burnette, a columnist from adnet.com under the Columbia Broadcasting System Corp (CBS) says it was "a pity and an avoidable mistake" for Google to retreat from China. And he also says it\’s "arrogant thinking to assume that we know what\’s best for China, and our values can still work well in that very different culture; and it\’s an ignorant idea to believe threats and ultimatums can bring positive results, especially from such proud and sufficient people."
The current "China Threat" theory shows Western countries are actually in fear of being dominated by China one day. The same goes for Google, who is insinuating a "you can\’t do without me" message to China. I was wondering whether Google is waiting for China to cater to it or trying get away from it.
(The comment was first published in Hong Kong\’s Chinese newspaper Sing Tao Daily)

http://www.cne.cc

Google says its Google.cn site redirected

Photo taken on March 17, 2010 shows the Google China headquarters in Beijing, capital of China. Google Inc. said on March 22, 2010 that users visiting Google.cn are now being redirected to Google.com.hk. The U.S. Internet company said in a blog posting that it intends to continue R&D work in China and also to maintain a sales presence there. (Xinhua/Xing Guangli)
Google Inc. on Monday said users visiting Google.cn are now being redirected to Google.com.hk.
The U.S. Internet company said in a blog posting that it intends to continue R&D work in China and also to maintain a sales presence there.

Photo taken on August 19, 2009 shows the Google headquarters in Silicon Valley, San Francisco, the United States. Google Inc. said on March 22, 2010 that users visiting Google.cn are now being redirected to Google.com.hk. The U.S. Internet company said in a blog posting that it intends to continue R&D work in China and also to maintain a sales presence there. (Xinhua/Wu Kaixiang)

http://www.nmgmzbwg.com.cn

China CNR expands urban train business

A signing ceremony between China CNR Corporation Limited and Shanghai Electric Group in Beijing last month. [Provided to China Daily]?China CNR Corporation Limited (CNR), a leading provider of locomotive and rolling stocks, hopes to develop its urban rail business with the acquisition of a 50 percent stake in a Shanghai train manufacturer.
The deal signed late last month agreed that China CNR will buy 44.79 percent equity in Shanghai Rail Traffic Equipment Development Co (SRTE) from Shanghai Electric Group for 365 million yuan . CNR will then inject 85 million yuan that will result in it owning half of SRTE.

The company hopes to accelerate its access to urban rail operations, and to increase its competitiveness. CNR has won contracts to supply bullet trains for the high-speed railway line between Shanghai and Beijing, but currently takes less than five percent of its business from urban rail.

On completion of the transaction Shanghai Electric\’s holding will be reduced to 34.91 percent and Shanghai Electric\’s controlling shareholder, Shanghai Electric (Group) Corp, will own the remaining 15.09 percent.
SRTE was established in 2003. Its main businesses include design, manufacture, sale, leasing, maintenance for rail vehicles and parts, electromechanical integration of rail transportation equipment, and project contracting. China\’s urban rail sector is a growth area, expected to be a total length of 4,500 km by 2020.

http://www.cne.cc

CNPC endeavors to meet rising gas demand

Taxis line up to get their tanks filled on a viaduct in Southwest China\’s Chongqing municipality November 16, 2009. The city is in severe shortage of natural gas and some taxi drivers waited for about two hours to get tanks filled, Chongqing Evening News reported.[Photo by Zhong Zhibing/Chongqing Economic Times]
China National Petroleum Corporation (CNPC), the country\’s leading oil and gas producer, told Xinhua Wednesday it has taken active measures to raise gas supply and meet rising market demand triggered by heavy snows and falling temperatures.
CNPC figures revealed that daily natural gas consumption volume in north China surged 56 percent year on year between November 1 and 16, while daily gas consumption in Beijing alone rose 57 percent year on year in this period.
The daily natural gas supply of CNPC nationwide has increased from 169 million cubic meters at the beginning of this month to the current 189 million cubic meters, said the Beijing-based firm.
Most of the company\’s gas transmission pipelines have reached their full capacity. The oil and gas producer would do its best to guarantee the demand for local residents\’ daily life use and the demand in Beijing and other cities, by reducing supplies to some industrial enterprises.
China embraced severe cold weather and heavy snows this winter, with almost all of north China expected to experience continuing low temperatures and gales, according to weather forecast of the China Meteorological Administration on Sunday.
Meanwhile, almost all of southern China will be covered by snow and rain, with Hubei and Anhui expecting storms, according to the forecast.

http://www.minamik.com

PwC: Overseas M&A deals peaking
Chinese companies may increase overseas mergers and acquisitions (M&As) by 40 percent next year while outbound deal value may hit a record high of $30 to $35 billion this year, PricewaterhouseCoopers LLP (PwC) said in a report yesterday.
With the global financial crisis making overseas assets more attractive, the value of Chinese companies\’ announced outbound M&A deals might triple this year over 2008, said the report.
The major risk for Chinese companies in fostering overseas M&A deals is the insufficient risk analysis capabilities, particularly in financial and legal aspects, said Wang Xiaogang, a partner at PwC China.
"Integrating the business after an M&A is also a daunting task for Chinese companies," Wang said.
Despite the impressive growth this year, the value of overseas M&A deals is still only a third of the domestic and inbound transactions values.
According to PwC, domestic M&A activity may increase by 20 percent next year.
Domestic and inbound M&A deal volumes in China (including Hong Kong and Macao) in the second half of 2009 are also returning to robust 2008 levels, indicating that the impact of the global economic downturn on Chinese M&As seems to be short lived.
More than 1,800 domestic transactions are likely to be recorded in the second half of this year, for a total of about 3,200 deals for the full year. That compares with 2,000 deals for the second half of 2008, and 3,797 deals for 2008, according to the report.
The financial services sector has the highest announced deal value in 2009, followed by the real estate sector.
Foreign strategic deal activities, however, continued to decline, with only 400 deals for the whole of this year, representing a 40 percent drop from 2008 levels. Foreign buyers have been sorting out problems in their home markets and this has shifted focus from acquisitions.

http://www.qb-china.com

Google exit good for small players
Google\’s threats to pull out of China have created much controversy recently, with many industry watchers believing its departure would allow Baidu, its key domestic rival, to dominate the world\’s largest online market.
However, under further examination, Baidu may not be the actual beneficiary of Google\’s exit, but rather smaller search engines, e-commerce firms and even the government will see new opportunities to fill the void.
Since Google established its China office in 2005, it has become one of the most successful players in the country\’s search engine market. Its domestic revenue hit 2.27 billion yuan last year, and it boasted a 31.8 percent market share.
Considering the fact that Baidu and Google China control over 90 percent of China\’s search engine market, it is more likely that Baidu will dominate the industry in the short term, if Google pulls out.
However, in the long term, growing concern over a potential monopoly by Baidu may actually provide more opportunities for smaller search engines like Sougou and Sousou. Chinese e-ecommerce companies such as Alibaba, DHGate and domestically affiliated networks like Yiqifa.com and Chanet will also have great opportunities to enter the vacancy Google would create.
In other words, former rivals would not only gobble up Google\’s market share, new market entries from outside the search engine market would also be well positioned to get a piece of the pie.
In addition, concerns over Baidu\’s possible market domination would also spark tougher regulations from the government. It is also possible that the Chinese authorities may launch their own version of a search engine, just like they did in the online video market.
These possible outcomes, though, may serve to better regulate the market, but inevitably slow the development of China\’s search engine market as a whole.
However, we have to admit that Google has disadvantages. For example, when compared with Baidu, the US search engine still has a lower recognition rate in China, especially outside bigger cities. The company also does not have a very good relationship with the government.
Even if Google finally decides to stay on, I think its business in China will inevitably suffer from the controversy.
The author is an analyst from domestic IT research firm Analysys International.

http://www.tbogg.com