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DaimlerChrysler opens new China factory

By JOE McDONALD, AP Business Writer 1 hour, 3 minutes ago

BEIJING – DaimlerChrysler AG on Friday formally opened its first factory to make Mercedes-Benz and Chrysler sedans in China, joining a rush of foreign automakers scrambling for a share of the booming Chinese car market.

The company plans to expand its financing business and is talking to potential Chinese partners about possibly producing a lower-cost model for the U.S. market, said chairman Dieter Zetsche.

Earlier, Zetsche and VIPs, including the Communist Party secretary of Beijing, attended a grand opening ceremony with fireworks and traditional Chinese drummers and dancers.

General Motors Corp., Volkswagen AG, Toyota Motor Corp. and other competitors already make cars in China.

A key challenge for foreign automakers in China is the government‘s insistence that at least 40 percent of their components come from Chinese suppliers, whose quality is still uneven. Zetsche said DaimlerChrysler intends to meet that target, though he acknowledged that it would not be able to do so immediately.

Zetsche declined to comment on U.S. and European complaints that China‘s tariffs on auto parts are too high. The governments are reportedly considering filing a World Trade Organization complaint against Beijing.

Zetsche said the company expected sales to meet those levels but would not say how long it would take. He said the factory is expected to be profitable when sales are well below its full capacity.

“We‘ve had a very slow ramp-up to make sure we get the quality right,” Hale said. “As we identify more suppliers that meet our standards, we bring them into the supply chain.”

The company has not disclosed prices for the models made in Beijing.

“With one partner, we have very much progressed (in talks), but still haven‘t come to a final decision,” he said.

The company‘s new Beijing factory is a joint venture with a Chinese partner, state-owned Beijing Automotive Industries Corp.

Beijing Automotive‘s chairman, An Qingheng, said the venture hopes eventually to produce 300,000 vehicles a year.

The joint venture‘s president, Guenter Butschek, said it plans to launch a new Chrysler advertising campaign in China shortly.

“This brand will for sure be far better known to the Chinese customer in a couple months,” he said.

Chrysler Corp. opened a joint-venture Jeep factory in Beijing in 1983, becoming the first Western company to produce vehicles in China since the 1949 communist revolution. Chrysler merged with Stuttgart, Germany-based Daimler Benz AG in 1998 to form DaimlerChrysler.

China aims to export US$70 bln worth of autos and auto components by 2010

China aims to increase exports of automobiles and automobile components to 70 billion U.S. dollars by the end of 2010, said an official with the Ministry of Commerce.

In the first half of 2006, China exported 34,500 units of sedans, surpassing the total export volume of 2005, and now exports to 207 countries and regions, China Automotive News reported.

From 2000 to 2005, China averaged 40 percent growth in auto and auto component export volume per year, with exports of complete vehicles growing at a rambunctious 70 percent per year.

Last year, the country’s car and auto parts exports hit 10.9 billion dollars, up 34 percent on the previous year.

However, to put this impressive growth into perspective, it needs to be remembered that China’s market share in world automobile and automobile component exports is less than 1 percent.

Source: Xinhua

China Auto Parts Scheme Challenged

US joined by EU and Canada on WTO dispute settlement action

WASHINGTON, DC – 09./16/06 – The US has joined with Canada and the European Union to request that the World Trade Organization (WTO) establish a dispute settlement panel regarding China’s overall treatment of US-made auto parts.

According to the Office of the US Trade Representative, Beijing is imposing charges that “unfairly discriminate” against imported auto parts and discourage automobile manufacturers in China from using imported auto parts in the assembly of vehicles.

Under China’s current regulations governing the importation of auto parts, all vehicle manufacturers in China that use imported parts must register with China’s Customs Administration and provide specific information about each vehicle it assembles, including a list of the imported and domestic parts to be used, and the value and supplier of each part.

If the number or value of imported parts in the assembled vehicle exceed specified thresholds, the regulations assess each of the imported parts a charge equal to the tariff rate of around 25% on complete automobiles, rather than the 10% tariff applicable to auto parts.

The regulations encourage auto manufacturers in China to use Chinese parts in the assembly process – at the expense of parts from the US and elsewhere.

The regulations also provide an incentive for auto parts producers to relocate manufacturing facilities to China.

China “appears to be acting inconsistently with several WTO provisions including Article III of the General Agreement on Tariffs and Trade 1994 and Article 2 of the Agreement on Trade-Related Investment Measures, as well as specific commitments made by China in its WTO accession agreement,” the statement said.

The US originally initiated the case on March 30, when it requested formal WTO consultations. The US, Canada, and the EU held joint consultations with China on the issue in Geneva in May.

Australia, Japan, and Mexico, which also export auto parts to China, participated in the consultations as third parties.

“While we remain open to settling this dispute, China’s current stance leaves us no choice but to proceed with our WTO case,” the statement said.

The US, it added, “is committed to providing a level playing field for US exporters to China and, as we have made clear, we will not hesitate to pursue dispute settlement if necessary.”

The US exported $681 million in auto parts to China in 2005, an increase of 6.5% over exports in 2004.

Over this same period, the market for automotive components in China increased by 16.8%, and the number of passenger vehicles sold in China increased by 27%.

US exports of auto parts to China accounted for 1.4% of total US auto parts exports in 2005, representing approximately 10% of China’s auto parts imports.

Honda opens new Accord factory in China

TOKYO, SEPT 19: Honda Motor Co, Japan’s third-largest automaker, opened a new factory in China, as it seeks to maintain its lead over Toyota Motor Corp and Nissan Motor Co in the world’s fastest growing major vehicle market.
The new factory, located in the southeastern city of Guangzhou, will have a capacity of 1,20,000 vehicles a year, the company said in a statement. Guangzhou Honda Automobile Co, Honda’s venture with Guangzhou Automobile Group Co, invested 2.2 billion yuan ($277 million) in the factory, which will make Accord models.

Honda, the first Japanese carmaker to set up a venture in China, is opening the plant after capacity shortages stunted its sales growth in the first half. The factory may enable Honda to maintain its lead over Toyota and Nissan, which are also investing in the world’s third-largest vehicle market.

‘‘Demand in China will continue to grow so Honda will likely add more capacity,’’ said Norihito Kanai, a senior research analyst at Meiji Dresdner Asset Management Co which manages $2.5 billion in equities in Tokyo. ‘‘If Honda can’t supply enough cars, customers will go elsewhere.’’

Honda set up its first venture in China in 1998, five years ahead of Toyota and Nissan. The company had about 5.7% of China’s passenger car sales in the first half, compared with Toyota’s 4.5% and Nissan’s 4.1%, according to the China Association of Automobile Manufacturers. Market leader Volkswagen had a share of 17.1%, the carmaker said.

—Bloomberg

China’s Auto Output Will Exceed 7 Million Cars in 2006

(Akron/Tire Review – Asiaport) China’s automobile output in 2006 will exceed 7 million cars, making a big leap from 5.7 million cars in 2005, forecasted by Zhang Xiaoyu, the deputy head of China Machinery Industry Federation, and chairman of the Society of Automotive Engineers of China. China’s automobile industry has become an integral part of the national economy after rapidly growing in the first five years of the new century. In 2005, the whole industry generated output value of approximately $151 billion and contributed near $25 billion taxes directly and indirectly, as well as providing 17 million jobs.

China to strengthen income tax collection from high earners

China’s revenue officers are to strengthen the management of income tax collection from people with annual incomes of more than 120,000 yuan (15,000 U.S. dollars), said a senior official with the State Administration of Taxation (SAT).

SAT deputy director Wang Li told a national conference on income tax collection and management that a system should be established to encourage high-income earners to declare personal income voluntarily.

The SAT would concentrate efforts from October and throughout next year on strengthening management and reform of the income tax system and on building a personal income information system to better monitor the actual status of high-income earners.

“There are loopholes in collecting income taxes from this group of people as their sources of income are diverse,” said an official with SAT Information Office, who asked to be anonymous.

Personal income tax files should be established and the management of industries with higher revenues should also be highlighted, Wang said.

Meanwhile, he said China’s corporate tax revenues rose to 431.6 billion yuan in the first seven months, 29.7 percent or 98.9 billion yuan more than same period last year.

Personal income tax revenues hit 168.4 billion yuan in the period, up 16.4 percent or 23.69 billion yuan, said Wang.

The growth in personal income taxes, introduced by China in 1980, was achieved after the government lifted the personal income tax threshold from 800 to 1,600 yuan a month from Jan. 1.

Source: Xinhua

Seek jobs on the line in China

ONLINE job ad company Seek has kicked off its global expansion with a $26.6 million investment in Chinese company Zhaopin, which it says is one of the country’s three leading recruitment websites.

Seek, which is backed by James Packer, will pick up a 25 per cent stake in the company. Andrew Bassat, joint chief executive of the company with his brother Paul, said he hoped it would be the “first of several” offshore acquisitions.

“We think that the internet employment space is a wonderful space and if you get it right, it is high margin, high profit and high growth,” Mr Bassat told the Herald.

“These things take time but we hope over the next year or so we’re able to announce a couple more [offshore acquisitions].”

Seek shares rose 11c, or more than 2 per cent, to close at $5.04 yesterday.

The company’s move into China comes amid speculation that its 25 per cent shareholder, Publishing and Broadcasting Ltd, is eyeing the online property ad market.

PBL has renamed one of its companies myhome.com.au and is rumoured to be partnering with the Raine family of Raine & Horne real estate.

It has also sounded out shareholders in online car ads business Carsales.com.au with a view to increasing its 41 per cent stake.

Some analysts believe PBL may look to amalgamate its online classifieds businesses at some stage.

But Mr Bassat said yesterday Seek was focused on jobs over the next year or two.

“Our focus is very much on employment and training in the short to medium term,” he said. Seek has a 55 per cent share of the Australian online employment ads market in terms of the volume of ads it carries, more than double the number two and three sites run by News Ltd and Fairfax.

Its revenue jumped more than 53 per cent to $109 million in the year to June 30, as it attracted more business in sectors such as government and health care and boosted its education and training division.

Net profit rose 68 per cent to $34 million, exceeding analysts’ expectations.

Mr Bassat said the company expected Zhaopin to become profitable in 2008.

He said over the next two years the company would “invest heavily”.

“Our model is to find a strong Chinese management team, give them capital and share some of our experience and expertise and support them.

“We are very much there to support them rather than control them.”

Zhaopin was founded in 1997. Its headquarters are in Beijing and it has branches in more than 30 cities in China.

Large numbers of low quality talent hurt China

China needs to take action against the large number of poorly qualified and low quality professionals with university or college certification, Chinese Talents Society Vice President Wang Tongxun said.

China Youth Daily reports Wang Tongxun issued his warning at a forum on human resources development held recently in Beijing.

Record numbers of Chinese citizens have received higher education in recent years. Over 66.5 million people have college degrees or above and around 17% of high school graduates enrol at university. There were 2.8 million graduates in 2005, nearly 9 times the number of graduates in 1985.

But Wang Tongxun said that as universities and colleges grow from institutions that cater to an elite group of students to institutions that education the masses, several problems have been created.

Degrees and titles are easy to obtain in China. Some universities or colleges issue diplomas recklessly, even providing them to people who have not attended the university courses. The lack of a sound qualification system allows poorly skilled Chinese professionals to receive titles more easily than their foreign counterparts.

Wang Tongxun also said the academic research at Chinese universities and research institutes is often carried out in a poorly planned and impatient manner. The resulting papers are rarely cited by foreign researchers and rank below 120 in the world in terms of citations. As a result, most of the research has no value and can’t be put into practice.

To compound the problem, the tendency for employers to value people according to their degrees rather than their talent and work experience has led to a culture of degree-hunting where people neglect to improve their talents in a measurable way.

Finally, Wang Tongxun said the phenomenon has led to a brain drain. Around 930,000 Chinese have traveled overseas to study since 1986, but only 230,000 have returned

China more and more attractive to foreign experts

When she returned to China after more than a decade away, Dutchwoman Murielle Van de Pol was amazed at the huge changes that had taken place in the country.

She studied at Peking University 12 years ago, and now is back to attend the 2006 Conference on the Exchange of International Professionals which ended here on Thursday.

The changes are so massive that China looks like a completely different country, she told Xinhua excitedly.

Representing the Netherlands Senior Experts (PUM) in China, she hopes to introduce more Dutch experts to China during the conference.

Like Murielle, many foreigners living in China are experiencing the rapid changes taking place in this ancient civilization. The dynamism and energy of China make it an attractive destination for foreign experts.

Piet Hein de Wit, PUM coordinator, comes to China four to five times a year. He said he likes working in China and the people here are very hospitable.

According to Piet, PUM has signed 80 projects agreements with Chinese organizations this year and over the last 12 years about 4,000 Dutch experts have been introduced to China to work on about 1,000 projects.

During the early years of China’s reform and opening up in the late 1970s, China only introduced about 1,000 foreign experts and professionals each year. The number has grown to 200,000-400,000 in recent years.

Last year China introduced 340,000 foreign experts and professionals, according to statistics from China’s State Administration of Foreign Experts Affairs (SAFEA).

SAFEA spokesman Liu Yongzhi said China’s rapid economic growth was the key factor in attracting more international talent, and the numbers of foreign professionals introduced to China is not likely to decrease over the next five years.

Pay levels in some companies and universities are now similar or even better than in developed countries, and this is another drawcard, Liu said.

About 700 foreign delegations from 30 countries, including Russia, the United States, Japan and France, attended the conference and 2068 letters of intent were signed.

Source: Xinhua

Infosys to Expand China Operations

A number of Indian outsourcing companies have set up operations in China to tap the local market for IT services and to support the operations of some of their multinational clients in the country. Infosys, India’s second-largest outsourcer, plans to increase its staff in China to 6,000 over the next five years.

India-based software outsourcing company Infosys plans to increase its investment in two new centers in China to a total of US$65 million over five years, after which it will be able to house a total of 6,000 engineers at its three centers in that country.

The centers will produce work in the areas of software development, IT services and business process outsourcing, and will also have training and research facilities.

Tapping Into China

A number of Indian outsourcing companies have set up operations in China to tap the local market for IT services and to support the operations of some of their multinational clients in the country.

Infosys plans to double the number of its workers in China to 1,000 this year. Bigger rival Tata Consultancy Services plans to increase the number of employees in China to 5,000 by 2010, from about 400 now.

“China is a domestic market for us because many of our multinational clients are expanding in China,” Chief Executive Officer Nandan Nilekani said in an interview in Singapore.

It is a “potential source of resources for our global clients and a potential base for serving the region because of the” Chinese script, he said.

China’s exports have soared as foreign companies, including many of Infosys’ clients, have set up factories in the country to benefit from low labor costs.

Expansion in Line With Strategy

Expansion in China may also help Infosys boost business in Japan, the world’s second-largest economy.

India’s second-largest outsourcer, Infosys plans to increase its staff in China to 6,000 over the next five years.

“The expansion is in line with our strategy to tap local talent as well as to expand our global delivery model to other locations,” said Bani Paintal Dhawan, a spokesperson for the company.

As of June 30, Infosys had 39,806 employees altogether, most of whom were located in India.

The company is setting up a center in Hanghzhou, China, at the Hanghzhou Hi-Tech Development Industry Zone, the company said in a statement.

The company said on Wednesday that it would set up a new center in Shanghai with seating capacity for 1,000 engineers over the next two years. That facility will be in addition to a facility the company already has at the Shanghai Pudong Software Park that employs about 250 people, according to Dhawan.

Low-Risk Delivery Model

The initial investment in the new Shanghai facility will be $10 million over the next two years, while the initial investment in Hanghzhou will be $15 million, according to the company.

Infosys provides consulting and IT services to clients globally — as partners to conceptualize and realize technology driven business transformation initiatives. With over 58,000 employees worldwide, it uses a low-risk global delivery model to accelerate schedules with a high degree of time and cost predictability.