Archives October 2006

IBM moves key US unit to China

SHANGHAI, Oct. 13 – Computing giant IBM Corp said it was transferring its chief purchasing operations to China, a move that highlights Asia’s growing importance in the global supply chain.

The decision to transfer its chief procurement office from New York to Shenzhen marks the first time the headquarters of a global IBM division has been located outside the US, the company said in a statement on Thursday.

The leading American technology and software group began shifting its Asia-Pacific headquarters from Tokyo to China’s commercial hub of Shanghai in 2004, a process it completed earlier this year.

It also has major research, software, hardware and computer services operations in India which make it that nation’s sixth largest technology-related employer.

The addition of its global procurement office to Shenzhen, where it has operated for over a decade and many of its 1,850 employees in Asia are based, is aimed at reshaping the company’s supply base in the region, IBM said.

The firm that revolutionized office work with electronic typewriters and then personal computers collaborates with 3,000 suppliers across Asia that account for about 30 percent of the 40 billion dollars IBM spends on annual procurement.

“The demand for software and services skills — across Asia and worldwide — is growing,” said the group’s global procurement chief John Paterson.

“To meet the demand, it will require developing relationships with new partners and suppliers and working with existing ones to help them build skills, processes and management practices to compete globally in the services market.”

IBM, once a leading hardware maker, struggled to transform itself over the past decade into a software producer but now earns about half of its revenues from outsourcing and IT consulting.

In May last year, it sold its personal computer unit to Chinese group Lenovo for 1.75 billion dollars, leaving the US company focused on business mainframes and consultancy services.

Paterson said it illustrated a shift underway at IBM from a multinational corporation to a new model — a globally integrated enterprise.

“In a globally integrated enterprise, for the first time, a company’s worldwide capability can be located wherever in the world it makes the most sense, based on the imperatives of economics, expertise and open environments,” he said.

For the first six months of the year, IBM recorded a 15.4 percent rise in net profits to 3.73 billion dollars, on a revenue drop of six percent to 42.55 billion dollars.

US losing international clout to China – Poll

Asians see the United States losing its undisputed international influence in 50 years to possibly China amid waning trust in Washington to act responsibly in the world, a poll showed.

The study is carried out by the Chicago Council on Global Affairs (CCGA), an independent US think tank.

In the immediate term, US power in the eyes of Asians remains secure.

US influence today is “substantially above any other country” even as others have gained clout, and Asians do not predict much of decline in US influence over the next decade, according to the survey in partnership with US-based Asia Society.

In half a century, however, a majority in all countries covered by the poll — China, India, South Korea and the United States — believed “another nation” will become as powerful or surpass the United States in power.

“There is a clear agreement across the board that over the next half century Asians see the United States no more the sole superpower that it is or considered to be today,” CCGA president Marshall Bouton told a news conference in Washington.

The survey did not specify in its questions which nation people believe will match or overtake the United States.

“We can only infer what nation people had in mind when they answered that question,” Bouton said. When asked whether it was China, he said “I guess so.”

China has become a global manufacturing power and is already displacing the United States as the primary trading partner for many nations.

China has also amassed the world’s largest trade surplus and world’s largest foreign exchange reserves. Its current account surplus has already surpassed that of Japan, the world’s second richest economy after the United States.

The poll also found Asians, including the Chinese, still wanting the United States to remain engaged in the region though they express low trust in the United States to act responsibly.

Trust in the United States to act responsibly in the world is “low,” according to the poll.

Biggest bio diesel oil factory to be built in China

Chinanews, Nanjing, October 12 – The biggest bio diesel oil factory will be built in Nantong, Jiangsu Province in China, and the foundation stone laying ceremony having been held on October 10.

BIOLUX biological fuel Co., Ltd, the famous Austrian bioenergy enterprise, invested 120 million Euros on the project, making it the best present to celebrate the 35th anniversary of the establishment of diplomatic relations between the two countries.

The new factory will have the capacity of processing 700 thousand tons of rapeseeds every year after completion in 2007, producing 265 thousand tons of bio diesel oil and about 400 thousand tons of protein, which will mainly be shipped to EU.

Being the biggest rapeseed producer, China has nearly unlimited potential to extract bio diesel oil. What’s more, nearly 75% of China’s rape fields are located in the Yangtze River basin, near the new factory. With the help of expressway and ocean shipping, the factory will surely play a very important part in the world bio diesel oil market.

China to reduce its trade growth

Chinanews, Beijing, Oct. 13 ¨C The Ministry of Commerce (MOC) has mapped out China¡¯s trade prospect for the eleventh five-year period. According to this plan, by 2010, the total trade volume will reach 2.3 trillion US dollars, increasing by 10% on a yearly basis, but far lower than the 24% actual annual trade growth rate during the tenth five-year period.

A person in charge at MOC explained that during the eleventh five-year period, China would no longer maintain the trade scale.

¡°If we set the figures too high, we won¡¯t be able to focus on the quality of the trade,¡± he said.

For many years, the high trade volume had been backed by large quantities of processing trade, which occurred in China because global economy had shifted its manufacturing base to China. After ten years of high growth, it is expected that such processing trade volume will begin to slow down. On the other hand, China¡¯s high foreign trade growth is largely prompted by its huge export volume, which is driven by a strong demand in the international market. After a certain number of years, such strong demand will also become weaker.

In order to realize the new trade goal, MOC will encourage more private enterprises to explore the international market. It is expected that by 2010, export volume contributed by private enterprises will account for 35% of the total export volume in China, while in 2005, private enterprises accounted for only 20% of the total export volume in China.

China already proceeds rapidly in its currency exchange regime, official

Chinanews, Beijing, Oct. 11 ¨C In a recent interview given to Finance and Economics magazine, Governor of the People’s Bank of China Zhou Xiaochuan said that allowing more flexibility in the Renminbi exchange rate had already become a clear goal for the exchange rate regime, under which supply and demand relations in the market would become more important. Right now, the reference of a basket of currencies to which Renminbi is pegged is diminishing while market factor is playing an increasingly important role.

He said that Renminbi exchange rate regime should be a process which should follow the principles of “proceeding in a controllable and gradual way and keeping the initiative in our own hands”.

The process of the Renminbi exchange rate regime depends on the current conditions of other factors related with it. The reform cannot proceed without considering other related factors. So far, the Renminbi exchange rate regime has already made great progress and the main part of the system has already been changed to be market-oriented. Judging from related factors, it can be said that the reform has already proceeded rapidly enough, Zhou Xiaochuan noted.

He pointed out that the opening of the capital projects in China should be based on two pre-conditions: first, related financial system should be operated in a healthy way — when management is still at a relatively low level and institutional reforms have not been well applied in some micro aspects, we should not hastily open up the capital market; secondly, before we open the capital industry, related legal system should be improved to effectively protect the property rights to prevent large amounts of capital from flowing outside the country.

Shanghai Top Marques 2006 attracts well-heeled buyers

Fancy cars, private jets, diamond watches and designer clothes are attracting well-heeled buyers at Shanghai Top Marques 2006, a four-day luxury lifestyle expo at the Shanghai International Convention Center in Pudong. The organizer expects visitors to spend 500 million yuan (US$62.5 million) on luxury goods. The list of pricey products includes a rare 89.98 million yuan woodcarving, a 9.99 million yuan Koenigsegg CCR sports car – the fastest in the world – and a 7 million yuan Porsche.