Chinese Economics Thread

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Uruguay to Buy 500 Electric Buses from BYD by 2015
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(How I wish I could breathe diesel smoke free air)

For a while we heard a lot about BYD and how they were going to be the next big thing in electric cars because of their superior battery technology. Warren Buffett's Berkshire Hathaway even invested in the Chinese company. Well, apparently having great battery technology isn't enough... They've scaled back and delayed a lot of their plans for electric cars (maybe they'll come back with a vengeance later once they've worked out the kinks), but they seem to be doing well with electric buses.

We recently wrote about how the city of Windsor was buying some, and now we learn that the president of Uruguay and BYD have signed a deal for 500 electric BYD buses.

"I am very pleased that Uruguay will have this environmental-friendly bus and new technology. I am looking forward to seeing electric vehicle technology in this country as we are very devoted to the protection of the environment," said President Mujica.

Mr. Juan Carlos Lopez Mena, President of Buquebus, Uruguay’s largest tourism company, stated, "I am ready to invest heavily in a natural Uruguay – I will replace my whole tourism bus fleet with new energy buses." BYD Senior Business Director Stanley Lin Tang commented, “Uruguay is an important tourism market yet it imports all of its petroleum. Promoting electric vehicles not only contributes to environmental protection and economic recovery, but it also improves Uruguay's energy security." Dr. Sasson Attie, President of CTS Auto S.A. represented the third partner of the project.

The BYD GreenCity buses in question have a range of 250 kilometers (155 miles) per charge in urban conditions, where they will be used. Energy consumption is less than 130 kWh per 100 km. They are powered by BYD's Iron-Phosphate battery technology, boasting the "highest safety, longest service life and most environmentally-friendly rechargeable chemistry" according to the company.

The BYD buses have been in service in four cities including Shenzhen, Changsha, Shaoguan and Xi’an accumulating over 5.6 million kilometers (or 3.4 M miles) by the end of April 2012. The first BYD electric buses will arrive in Uruguay before end of 2012 with targets to have over 500 buses running on roads by 2015.

[Equation]

Here's some positive news about how Americans really envy this Chinese CEOs action, go read the many comments on it at the bottom of the article.


This Chinese Computer CEO Will Restore Your Faith in Humanity

Bonuses make up a huge part of executive pay in the United States, and though Chinese incentive structures are different, the same is true there. The CEO of Lenovo (LNGVY), a major Chinese computer parts maker, has found a pretty darn nice way to spend his.
Yang Yuanqing took in a $3 million bonus after the company reported a massive 73% jump in profits in the first three months of the year, ending Lenovo's best fiscal year to date.
The company thanked Yang for his performance with an extra $3 million, and he gave it all away to 10,000 lower-ranked employees in Lenovo's offices, call centers, and factories. Each worker received 2000 renminbi,or $314.
This is about the equivalent of a month's salary for many Lenovo workers.
Before you call Yang a selfless working-class hero, keep in mind that the $3 million is only part of the $14 million that he has been awarded in various ways including salary, stock, and other benefits for his work at the company.
Certainly, the employees of other tech companies are hoping that their CEOs follow suit.
According to a study by the Economic Policy Institute, CEO compensation has outpaced the average worker's pay by astonishing margins over the past few decades. CEO compensation grew by a shocking 725% between 1978 and 2011, far outpacing the growth of the stock market. The average worker's pay has only risen by 5.7% in the same period.
Lenovo's rise in the market for PCs has been quite prodigious in the past few years. It blew past Dell (DELL) and it's rapidly closing the gap between itself and Hewlett-Packard (HPQ) in the global market for PCs running Microsoft (MSFT) Windows, according to this chart by IDC. In the global computer market, Apple (AAPL) doesn't make it into the top five, but it is third in US computer sales.

This Chinese Computer CEO Will Restore Your Faith in Humanity - Yahoo! Finance

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Just a general interest story. I thought this would be as good a place as any.



Chinese Junior Scientists to visit Quad Cities July 24 - Quad Cities Online


More than 30 top Chinese students from "key" high schools will visit the Midwest this summer to begin a 10-year relationship between the people of the Mississippi and Yangtze basins using culture, conservation and commerce as diplomatic tools that support a renewal of the Shanghai Communique in 2022.

The program was described as "a project with a great deal of promise and imagination" by former Secretary of State Lawrence Eagleburger before he died last year. It also responds to Chinese Vice President Xi Jinping's call for innovative, people-to-people projects that emphasize mutual respect and win-win initiatives. Mr. Xi visited Muscatine, IA on the Mississippi in February and made his comments to its residents who visited China in June.

"We are excited to be part of history in connecting the people of our countries, using rivers as bridges," said Xiaojun Lu, president of the Environment and Public Health Network for Chinese Students and Scholars, which is sponsoring the nearly three-week event along with the Iowa and Wisconsin Departments of Natural Resources.

The educational program is called Rivers as Bridges. Students will learn scientific procedures in field research, wet labs, and hands-on experiments in natural resources sciences with study about air, water, biology, soil, fisheries, wildlife, and wetlands.

They will tour universities, camp, fish, swim and do service projects in Illinois, Iowa and Wisconsin. They will meet US students, attend a family friendship dinner and share culture with Ho Chunk youth and then join them at a water park. The students will make posters on science and friendship and earn a recommended credit from the Northland Pines High School in Eagle River, WI.

A Rivers as Bridges goal, Lu said, is to begin a youth-inspired relationship that can result in a renewal of the 1972 Shanghai Communiqué. That diplomatic document, signed by Premier Zhou Enlai and President Richard Nixon sought normalization of relations. The Rivers as Bridges concept and link to the Communique came from a 2010 "campfire diplomacy" college student event in Iowa and Wisconsin called the River Spirit Exchange.

The 2012 program is from July 20 to August 6. Stops include Evanston, Chicago, Moline and Rock Island in Illinois; Davenport, Muscatine, Fairport, Pleasant Valley, Bellevue and Dubuque in Iowa; Platteville, Mineral Point, Madison, Columbus, Horicon, Ripon, Baraboo, Wisconsin Dells, Rhinelander, Eagle River, Appleton and Milwaukee in Wisconsin.

Funding is coming from Chinese parents and financial and in-kind donations. ENCSS is a 501 c 3 not-for-profit organization, founded at the University of Wisconsin in 2006.

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This might give Lenovo a fright

Mobile phones trump computers among online Chinese

Mobile phones have overtaken computers as the most popular device for getting online in China, the government said Thursday, as it announced the number of web users had hit 538 million.

Read more at: Mobile phones trump computers among online Chinese

" China has the world's biggest online population, with nearly four out of 10 of its 1.3 billion people now using the web, according to a report from the state-linked China Internet Network Information Center (CNNIC). Until this year, a majority of Chinese web users accessed the Internet via computers. But smartphones have allowed more and more rural Chinese to go online in areas not covered by fixed-line networks, the report said. Nearly 52 percent of users who started to use the Internet this year are from the countryside. "Mobile phones are a cheaper and more convenient way to access the Internet for (residents in) China's vast rural areas and for the enormous migrant population," said the report. The number of people using mobile phones to go online rose to 388 million in the first half of this year, up 9.2 percent from the end of 2011, while 380 million used computers. "Smartphones are more and more powerful and there is a new wave of mobile application innovation," the report said. "Meanwhile, mobile phone prices continued to drop -- the emergence of smartphones under 1,000 yuan ($157) sharply lowered the threshold for using the devices and encouraged average mobile phone users to become mobile web surfers............"

[bladerunner]

Here's some positive news about how Americans really envy this Chinese CEOs action, go read the many comments on it at the bottom of the article.


This Chinese Computer CEO Will Restore Your Faith in Humanity

Bonuses make up a huge part of executive pay in the United States, and though Chinese incentive structures are different, the same is true there. The CEO of Lenovo (LNGVY), a major Chinese computer parts maker, has found a pretty darn nice way to spend his.
Yang Yuanqing took in a $3 million bonus after the company reported a massive 73% jump in profits in the first three months of the year, ending Lenovo's best fiscal year to date.
The company thanked Yang for his performance with an extra $3 million, and he gave it all away to 10,000 lower-ranked employees in Lenovo's offices, call centers, and factories. Each worker received 2000 renminbi,or $314.
This is about the equivalent of a month's salary for many Lenovo workers.
Before you call Yang a selfless working-class hero, keep in mind that the $3 million is only part of the $14 million that he has been awarded in various ways including salary, stock, and other benefits for his work at the company.
Certainly, the employees of other tech companies are hoping that their CEOs follow suit.
According to a study by the Economic Policy Institute, CEO compensation has outpaced the average worker's pay by astonishing margins over the past few decades. CEO compensation grew by a shocking 725% between 1978 and 2011, far outpacing the growth of the stock market. The average worker's pay has only risen by 5.7% in the same period.
Lenovo's rise in the market for PCs has been quite prodigious in the past few years. It blew past Dell (DELL) and it's rapidly closing the gap between itself and Hewlett-Packard (HPQ) in the global market for PCs running Microsoft (MSFT) Windows, according to this chart by IDC. In the global computer market, Apple (AAPL) doesn't make it into the top five, but it is third in US computer sales.

This Chinese Computer CEO Will Restore Your Faith in Humanity - Yahoo! Finance

Once upon a time the average CEO salary was about 7X the wage that a production line worker got.




China keen to avoid CO2 rollercoaster ride
http://in.reuters.com/article/2012/0...86J0BA20120720

Reuters Point Carbon) - Price control mechanisms and tightly regulated markets are among the measures China is considering for its emissions trading schemes in a bid to avoid the price volatility and scandals that have hit Europe's $148-billion scheme.

As seven cities and provinces in China are preparing to launch the country's first emissions trading schemes to halt the nation's spiraling greenhouse gas emissions, the international carbon market is reeling from a huge over-supply and record low prices.

European permits have lost 80 percent of their value since mid-2008 and 50 percent in the last twelve months, spurring claims that the carbon market is becoming irrelevant in the EU's efforts to cut emissions.

"China will consider introducing both a price ceiling and a price floor to prevent the dramatic price fluctuation seen in the EU ETS," said Chen Jianpeng with the State Council's Development Research Centre, which is involved in studying the impact of a future Chinese ETS.


China : Air Products to Supply Samsung Electronics New Memory Fabs in Western China [TendersInfo (India)]

http://www.equities.com/news/headlin...171&cat=energy


Air Products today announced it has been awarded a major contract from Samsung Electronics Co. Ltd. in support of its new fabs in Xi an, Shaanxi Province, western China. This investment marks Samsung Electronics largest ever overseas investment and the most advanced fabs in China.

The contract reinforces Air Products global leadership position in the electronics industry and also strengthens its leading role in China by further expanding into the emerging western China region.

Air Products will supply ultra-high purity nitrogen and other bulk gases, including oxygen, argon, hydrogen, helium and compressed dry air, to Samsung Electronics fabs in Xi an High Tech Zone, where the first phase is scheduled to be operational in the second half of 2013. In addition, liquid products will be supplied to the merchant market in the region. Under the contract, Air Products will build several large air separation plants.

The memory products produced from the fabs will be widely used in portable devices such as smart phones, tablet computers, digital cameras, USB drive, and other consumer electronics markets where China represents a major market.

Samsung is a long-standing and strategic customer for Air Products worldwide. We are honored to have their continued confidence in our capabilities and to be selected to support the most advanced fabs in China, said Wayne Mitchell, vice president and general manager of the Electronics Division at Air Products. This significant contract further positions Air Products as a reliable supplier for Samsung and the semiconductor industry.

Air Products has been accelerating its growth in western China. The company first entered Shaanxi Province in 2006 to serve the electronics industry and has recently won several major contracts for its Tonnage business. The company also recently announced the grand opening of its new office in Xi an High Tech Zone, which includes engineering capabilities to support its fast business growth in China.

Air Products has been serving the global electronics industry for more than 40 years and gained leadership positions in semiconductor,TFT-LCD, and other emerging markets with its integrated gases and services solutions.

Air Products provides atmospheric, process and specialty gases; performance materials; equipment; and technology. For over 70 years, the company has enabled customers to become more productive, energy efficient and sustainable. More than 18,000 employees in over 40 countries supply innovative solutions to the energy, environment and emerging markets. These include semiconductor materials, refinery hydrogen, coal gasification, natural gas liquefaction, and advanced coatings and adhesives.

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CNOOC to buy Nexen for $15.1 billion in China's largest foreign deal

State-controlled CNOOC Ltd launched China's richest foreign takeover bid yet on Monday by agreeing to buy Canadian oil producer Nexen Inc for $15.1 billion, forcing Ottawa to decide whether security concerns outweigh its desire for foreign investment in its energy resources.

CNOOC, China's third-largest oil company, hopes to sell the deal to shareholders and the government with a hefty 61 percent premium to Nexen's Friday stock price. It promised to retain all employees and to make Canada home base for its Western Hemisphere operations.

CNOOC is offering $27.50 cash a share for Nexen, which has oil sands operations in the Canadian province of Alberta, shale gas in the province of British Columbia and extensive exploration and production holdings in the North Sea, Gulf of Mexico and offshore West Africa.

The initial shareholder reaction was enthusiastic. Shares of Nexen, whose board unanimously approved the deal, surged C$9.06, or 52 percent, to C$26.35 in Toronto on Monday.

"You won't find a single shareholder on the entire planet, or in the solar system, who is unhappy with this deal," said David Taylor, president and chief investment officer of Taylor Asset Management.

The move is the most ambitious foray by resource-hungry China into North American energy since a 2005 attempt to buy U.S.-based Unocal for $18.5 billion was thwarted by a political backlash there.

Chinese companies have been among the most aggressive in targeting assets around the globe to help feed demand in the world's second-biggest economy.

As for Canada, Prime Minister Stephen Harper has pushed to attract more energy investments from China. The CNOOC deal shows his efforts are bearing fruit, and Canada has more reasons to accept the deal than to veto it.

"For Canada, this agreement provides a stable source of investment for the many projects that Nexen operates, which includes the exploitation of bitumen in Alberta," CNOOC Chief Executive Li Fanrong said in a conference call.

"Because we intend to be a local company as much as a global one, we also intend to seek a listing for CNOOC Ltd on the Toronto Stock Exchange."

The deal is subject to a review by the Industry Ministry, which by law must decide if the takeover would bring a "net benefit" to Canada.

In its favour is both CNOOC's commitments to Canada, and the fact that Nexen's operations are mostly outside Canada.

CNOOC has only nine years worth of reserves based on its current production -- one of the lowest ratios among major oil companies worldwide. It said the deal would increase its proven reserves by 30 percent.

"CNOOC has been seeking overseas acquisitions, as the domestic reserves are limited. But there has been many limits, things like foreign companies (being) reluctant to sell, price too high. This deal would be quite a success," said Yan Shi, an oil analyst at brokerage UOB Kay Hian in Shanghai.

The move was quickly followed by another Chinese play for Canadian-owned oil assets, as Sinopec Corp said it would buy 49 percent of Talisman Energy's British unit for $1.5 billion.

CNOOC already has partnerships with Nexen, once a unit of Occidental Petroleum Corp. The Canadian company recently underwent a management shake-up and has been seen for years as a potential target.

Analysts had talked of Nexen as a turnaround story since Kevin Reinhart took over as interim CEO early this year. He won kudos for improving the reliability of such projects as the huge Buzzard oil field in the North Sea after years of missed production targets.

"I've watched this company try to turn itself around for so long," Taylor said. I'm not saying they couldn't have done it this time, I'm just saying that some of their assets are extremely tricky and complicated and there are a lot of unknowns."

Taylor said a rival bid is unlikely to emerge, given the huge premium and the fact that CNOOC is offering all cash.

Nexen is one of his top 10 holdings in the IA Clarington Focused Canadian Equity Class and Focused Balanced Fund.

Yet Nexen's C$6.1 billion Long Lake oil-sands development, for example, is several years behind schedule in reaching capacity production.

Such persistent problems have kept the stock well below the company's net asset value, said Norman MacDonald, vice president and portfolio manager at Invesco Trimark...

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China's Sany acquires Germany's truck mixer maker Intermix

Sany Heavy Industry, a leading Chinese manufacturer of construction machinery, announced Tuesday that it has fully acquired Intermix GmbH, a German truck mixer maker.

Sany spent 8.1 million euros to buy all of Intermix from its founder Hans-George Stetter on July 19 through its subsidiary Putzmeister, a German concrete machinery manufacturer, according to a statement from Sany.

The acquisition will expand Putzmeister's product portfolio, extend its industry chain and better collaborate with Sany's existing business, the statement said.

Intermix, founded in 1984, is the third-largest manufacturer of truck mixers in the world. It had a sales revenue of 10.1 million euros in 2011.

Sany, Putzmeister and CITIC Private Equity Advisors (Hong Kong) signed an agreement on the merger of the three companies on Jan 20. On April 16, Sany and CITIC PE completed the transfer of Putzmeister shares, with Sany acquiring a 90 percent stake and CITIC PE receiving the remaining 10 percent.

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Migrant Workers in China Face Competition from Robots

One of the defining narratives of modern China has been the migration of young workers—often girls in their late teenage years—from the countryside into sprawling cities for jobs in factories. Many found work at Foxconn, which employs nearly one million low-wage workers to hand-assemble electronic gadgets for Apple, Nintendo, Intel, Dell, Nokia, Microsoft, Samsung, and Sony.

So it was a surprise when Terry Guo, the hard-charging, 61-year-old billionaire CEO of Foxconn, said last July that the Taiwan-based manufacturing giant would add up to one million industrial robots to its assembly lines inside of three years.

The aim: to automate assembly of electronic devices just as companies in Japan, South Korea, and the United States previously automated much of the production of automobiles.

Foxconn, one of China's largest private employers, has long played an outsize role in China's labor story. It has used cheap labor to attract multinational clients but now faces international scrutiny over low pay and what some see as inhumane working conditions.

"Automation is the beginning of the end of the factory girl, and that's a good thing," says David Wolf, a Beijing-based strategic communications and IT analyst. Wolf, who has visited many Chinese factory floors, predicts an eventual labor shift similar to "the decline of seamstresses or the secretarial pool in America."

Since the announcement, Guo hasn't offered more details, keeping observers guessing about whether Foxconn's plans are real. (Through its public-relations firm, Burson-Marsteller, Foxconn declined to describe its progress.) Trade groups also haven't seen the huge orders for industrial robots that Foxconn would need, although some experts believe the company may be developing its own robots in house.

"Guo has good reasons for not waving his flag about this too much," says Wolf. Keeping quiet could give Foxconn a jump on competitors. What's more, with the Chinese economy slowing down, "it is politically inadvisable to talk too much about replacing people with robots," he says.

China's leaders see employment as essential to maintaining a harmonious society. The imperative of creating jobs often trumps that of efficiency. For instance, Wang Mengshu, deputy chief engineer at China Railway Tunnel Group, says that labor-saving equipment isn't always used even when it's available. "If all the new tunnels were built with the advanced equipment, that would trim the need for the employment of about six million migrant workers," he says. "In certain fields we don't want to have fast development in China, in order to solve the national employment problem."

About 300,000 Chinese workers currently live in dormitories at Foxconn's Longhua factory complex, where Apple products are assembled. Most spend their days seated beside a conveyer belt, wearing white gowns, face masks, and hairnets so that stray hairs and specks of dust won't interfere as they perform simple but precise tasks, again and again. Each worker focuses on a single action, like putting stickers on the front of an iPhone or packing a finished product into a box. As managers told ABC's Nightline, which aired a rare look inside the factory in February, it takes five days and 325 steps to assemble an iPad.

Such highly structured and predictable tasks are well suited to automation, says Jamie Wang, a Taipei-based analyst for the research firm Gartner. Industrial robots, typically equipped with a movable arm, use lasers or pressure sensors to know when to start and finish a job. A robot can be operated 160 hours a week. Even assuming competition from nimble-fingered humans putting in 12-hour shifts, a single robot might replace two workers, and possibly as many as four.

Wang stresses that Foxconn can't replace human workers right away because automating assembly lines would require rejiggering its entire manufacturing process. Larger changes in China also won't occur overnight. Smaller Chinese factories can't afford to invest in robotics, and factory wages are still relatively low—about $315 to $400 per month in the Pearl River Delta, according to Liu Kaiming, director of a Shenzhen-based labor organization called the Institute of Contemporary Observation.

Despite that, Foxconn isn't the only Chinese manufacturer betting on robots. The International Federation of Robotics, based in Frankfurt, tracked a 50 percent jump in purchases of advanced industrial robots by Chinese manufacturers in 2011, to 22,600 units, and now predicts that China will surpass Japan as the world's largest market in two years. It's obvious, Wolf says, that industrial robotics "is about to get very hot in China."

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China in talks to build UK nuclear power plants

China is poised to make a dramatic intervention in Britain's energy future by offering to invest billions of pounds in building a series of new nuclear power stations.

Officials from China's nuclear industry have been in high-level talks with ministers and officials at the Department of Energy and Climate Change (DECC) this week about a plan that could eventually involve up to five different reactors being built at a total cost of £35bn.

Greenpeace described the move as desperate, while others warned of security fears, but the government has been courting China as the UK atomic programme has been hit by rows over subsidies and worries that EDF – the French company with the most advanced plans to build new reactors in the UK – could be hampered by the change of government in Paris.

China has operated its own atomic plants since 1994. It is awash with cash from its hugely successful industrial expansion and sees the UK as a potential shop window for exporting its atomic technology and expertise worldwide.

Companies from China have already invested in or taken over other infrastructure assets in Britain, such as Thames Water, the port of Felixstowe and the Grangemouth oil refinery. They also own businesses ranging from Weetabix to the Gieves & Hawkes tailoring brand.

The China National Nuclear Power Corporation (CNNPC), which is keen to invest in Britain, has just unveiled plans to raise about £17bn through a domestic share offering.

A team from the Shanghai Nuclear Engineering Research and Design Institute (SNERDI), an arm of the huge China National Nuclear Corporation (CNNC), met senior DECC officials over the last few days, three different sources confirmed.

The first part of the plan involves CNNC and another state-owned firm, China Guangdong Nuclear Power Corporation, bidding in two separate groups against each other for a stake in the Horizon consortium, which wants to construct new atomic plants at Wylfa in Wales and Oldbury in Gloucestershire.

But sources close to the Chinese say they are also interested in other locations at Bradwell in Essex, Heysham in Lancashire and Hartlepool in County Durham.

EDF has the right of first refusal to operate on these sites but CNNC wants to use an existing technology tie-up with US-based nuclear engineering group Westinghouse to potentially build three more reactors.

The Chinese accept they would need to bring in a UK utility firm to operate the plants and overcome any political or public resistance to their plans.

"The Chinese have the money and the experience," said the well-placed source. "They see setting up in the UK as an opportunity to show they can operate in one of the world's toughest regulatory environments so they can then move into other markets in Africa and the Middle East."

The DECC was unwilling to comment on whether it had met SNERDI officials this week, saying such meetings would be commercially confidential. A DECC spokesman would only say: "The UK is open for business and actively welcomes inward investment to our energy sector, but any potential nuclear operator is, and would be, subject to rigorous scrutiny through the established regulatory process."

Keith Parker, chairman of the Nuclear Industry Association in London, said it was "highly encouraging" that China wanted to invest in the UK. "They have 14 of their own reactors in operation and 25 under construction and they use both [French multinational] Areva and Westinghouse designs that could be used here. It was clear from my discussions with them that they have international ambitions."

In May, the energy minister Charles Hendry told the Energy and Climate Change select committee that he had no objection to Chinese firms being involved in the UK.

"In China, there are different companies who have experience of building dozens of nuclear power stations on time and on budget, and so there is no suggestion that these are companies that do not have expertise in this sector. They have extremely well-proven expertise in this sector, and in looking at how we take this forward in the United Kingdom I think we should be guided by where that expertise has already been proven."

But Greenpeace said the bid to woo China was a last throw of the dice by the government. "This is a sign of desperation," said Doug Parr, chief scientist at Greenpeace. "Chinese nuclear players have state backing, which could help solve the issue of financing colossally expensive new nuclear power stations in the UK. But this just means that the money from UK taxpayers will flow to the Chinese government, rather than to France."

The potential for political conflict has been highlighted by the former Downing Street energy policy director Nick Butler. He wrote in a recent Financial Times blogpost that Chinese involvement in the UK energy business could be a concern. "They will be inside the system, with access to the intricate architecture of the UK's National Grid and the processes through which electricity supply is controlled, as well as to the UK's nuclear technology.

"Perhaps that doesn't matter. Perhaps a Chinese wall exists between the Guangdong Holding company and the government in Beijing. Perhaps we have reached a level of globalisation in which the nationality of ownership is irrelevant.

"But even if all those things are true, it seems regrettable that in return for this investment the Chinese are not being required to halt the cyberattacks and the theft of intellectual property in which they are now the world leaders."

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Huawei overtakes Ericsson as world's largest telco player

Huawei Technologies knocked off Swedish telco giant Ericsson to become the world's largest telecom equipment vendor by sales for the first time, after it reported an increase of 5.1 percent in sales to 102.7 billion yuan (US$16.1 billion) yesterday.

Ericsson, previously the world's second-largest equipment manufacturer, last week reported a drop in sales to 106.3 billion kronor (US$15.25 billion) during the first half of 2012, less than Huawei's sales over the same period.

Huawei estimates 15 percent growth and improved operational efficiency for this year, and expects its 2012 profitability to match last year's numbers. "We are relatively optimistic about the company's operating performance and profitability in the remaining days of this year," said Huawei's CFO Meng Wanzhou.

A staff from Huawei said the company's first-half performance has roughly met the company's expectations. Since 2011 Huawei has made aggressive expansion into the terminals market which has driven its revenue growth.

In the face of uncertainties in the global economy, many telecom equipment makers are scaling down costs.In 2011, Ericsson sold half of the stake in its joint-venture with Sony Ericsson to Sony and this deal to some extent dented Ericsson's scale.

Ericsson has placed increasing value on its global services and support solutions businesses which have accounted for about half of the company's revenues and have maintained rapid growth.

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China's Lenovo inches closer to a global tech title

Lenovo Group Ltd is on track to overtake Hewlett-Packard Co as the world's biggest PC maker by sales as soon as this year, making it the first Chinese company to grab the top spot globally in a technology sector.

The ThinkPad maker's rise highlights the advance of China's technology firms on the world stage in recent years thanks to a combination of aggressive pricing, overseas acquisitions and their taking advantage of a fast-growing home market.

Analysts, however, also warn that Lenovo's rapid gains in market share have come at the expense of profit margins, while the company faces slowing growth in the market for personal computers and tough rivals in the tablet PC space.

"It's just a matter of time before Lenovo becomes No. 1 and it won't be surprising at all if it happens later this year," said Frederick Wong, executive director at Avant Capital Management (Hong Kong) Ltd, which owns shares in Lenovo.

He added, however, that competition in the tablet sector and a weak PC market outlook could put pressure on Lenovo.

Lenovo, which became the world's No. 2 PC vendor in the third quarter of 2011, had a 14.9 percent global market share in the April-June quarter this year, a mere 0.6 percentage point away from HP's 15.5 percent, according to research firm IDC's latest data. Figures from industry tracker Gartner show an even narrower gap, with Lenovo just 0.2 percentage point from HP.

In another technology sector, China's Huawei Technologies Co Ltd, the world's No.2 maker of telecom equipment, had been expected to surpass Sweden's Ericsson in 2011 sales. But slow telecom spending, stiff competition in the handset market and difficulties in tapping the massive U.S. market held it back.

SWITCHING LANES

Lenovo's rise has been helped by its purchase of Germany's Medion and a joint venture with Japan's NEC Corp last year, as well as its acquisition of IBM Corp's PC business in 2005.

Investors have rewarded Lenovo for its market share gains, sending its stock up by around 16 percent this year and outpacing rivals HP, third-ranked Dell Inc and No. 4 Acer Inc, whose stocks have dropped over the same period.

Lenovo currently trades at a multiple of 12.5 times forward earnings, the second-highest among the top-five PC makers and well above the 4.6 times multiple for HP, Thomson Reuters Starmine data showed.

But profit margins have suffered. Lenovo had a 1.4 percent operating margin in the latest quarter, lower than HP's 7.4 percent and Dell's 6.2 percent, the data showed. "HP, Dell and Acer have switched lanes in the PC race and passed the baton to Lenovo in terms of focusing on sales rather than margins," said Dickie Chang, an analyst at IDC in Hong Kong.

Another risk is slowing growth in the PC market as the global economy, including Lenovo's home turf and stronghold China, eases. China accounts for about 42 percent of Lenovo's total revenue, with the bulk of that coming from PC sales.

Global PC shipment growth was largely flat in the second quarter, marking the seventh straight quarter of low 0 to 5 percent growth for the industry.

"We remain positive on Lenovo's market share expansion, but the absolute growth is nevertheless being negatively impacted by a slower market," Jefferies said in a report. Jefferies has an "underperform" rating on Lenovo with a price target of HK$5.70.

Overall PC demand could pick up this year with the launch of Windows 8, though the catch is that competition in the sector for tablet PCs -- not Lenovo's strongest area -- will heat up because the operating system is designed to run on laptops and tablets.

Mizuho analyst Charles Park forecasts the PC market will grow by just 3 percent this year.

Lenovo's tablets, its LePads, will also face competition from new products, including the next versions of Amazon.com Inc's Kindle Fire and Apple Inc's iPad, as well as Google Inc's Nexus 7 and Microsoft Corp's Surface.

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China exports diesel locomotives to Angola

A Chinese locomotive maker announced on Monday that it has delivered five diesel locomotives to Angola, in China's first locomotive export to the African country.

The delivery, the first batch of the order, was made by Dalian Locomotive, a subsidiary of China North Locomotive and Rolling Corp. Ltd. (CNR), the nation's second-largest train maker.

According to an agreement signed in 2011, Angola, which used to import locomotives from the United States, will buy 15 diesel locomotives from CNR Dalian in total.

Taking full consideration of the local environment and climate, CNR Dalian has made special designs for the exports, including large shutters, to prolong the equipment service life and ensure safe operation, according to the company.

[Player 0]

All the news i look up is talking about a slow down in Chinese manufacturing sector, can anyone explain why this is happening, how is it affecting the development of a service sector and consumer/investor market too?

I've been away for several months and my access to the internet and thus the news has been rather restricted.

Can anyone fill me in?

[Player 0]

Double post

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All the news i look up is talking about a slow down in Chinese manufacturing sector, can anyone explain why this is happening, how is it affecting the development of a service sector and consumer/investor market too?

I've been away for several months and my access to the internet and thus the news has been rather restricted.

Can anyone fill me in?

Welcome back! Well a lot of the slow down are in the low tech industries, like shoes, clothing, etc., but the high tech gears are pretty solid. Especially autumn is approaching, therefore products will be in demand again for the upcoming Holidays and back to school stuff.