China Business News

Macao’s visitors arrivals in package tours for the first two months of 2008 grew by 11.3 percent year-on-year to 773,273, according to official figures released on Tuesday.

According to the Statistics and Census Service (DSEC) of the Macao SAR (Special Administrative Region) government, 392,277 visitor arrivals in package tours were logged in Macao in February, an increase of 3.8 percent from a year earlier. Visitors from the Chinese Mainland (281,620) and Japan (16,123) recorded year-on-year growth of 2.1 percent and 78.1 percent respectively, while those from Hong Kong (24,736) dropped by 36.8 percent.

Thanks to the ballooning amount of tourists, the number of hotel guests rose by 22 percent year-on-year to 1,045,923 in the first two months of 2008.

In addition, a total of 483,247 guests checked into local hotels and similar establishments in February, representing a year-on-year growth of 13.1 percent, and the majority of the guests came from the Mainland (48.1 percent) and Hong Kong (25.7 percent), said DSEC.

However, DSEC figures also indicated that local average hotel occupancy rate dropped by 2.7 percentage points to 71.4 percent int he same month, with 4-star hotels leading at 74.1 percent.

China Mobile Communications Corp, owner of the world’s most valuable phone company, has dropped its policy of only pursuing investments that result in management control, after competition for phone assets drove up share prices.

“In the past, the only policy was: we have to get majority shares,” Chief Executive Wang Jianzhou said. “But now, we are changing the policy.”

The strategy shift widens the number of possible investments for China Mobile Ltd’s State-owned parent, which made its first international acquisition last year through the purchase of Pakistan’s Paktel Ltd.

Investors seeking to profit from developing nations have pushed up the MSCI Emerging Markets Telecommunications Services Index 29 percent in the past 12 months, compared with a 6.5 percent drop globally.

“The change in strategy by China Mobile could accelerate acquisitions by the company,” Francis Cheung, a telecommunications analyst at CLSA Ltd, said. “It is a better long-term approach for China Mobile, which has been slow to make acquisitions overseas.”

The company is keeping its focus on emerging markets in Asia, Africa and the Middle East for possible stake purchases, Wang said at the Boao Forum For Asia conference in Hainan, southern China. The Chinese company doesn’t have a target investment for now, he said.

“Many operators are chasing the same assets in emerging markets, so they are very expensive,” Wang said.

China Mobile, which bought Paktel for about $460 million, is competing with carriers including Singapore Telecommunications Ltd and Hutchison Telecommunications International Ltd for assets in emerging markets, where operators are adding subscribers at a faster rate than in developed economies because of lower mobile penetration.

An attractive investment for China Mobile could be Telekom Malaysia Bhd, which has assets in emerging markets including Ghana, Sri Lanka and Indonesia, Cheung said.

Another possibility is to acquire a stake in Singapore Telecom from controlling shareholder Temasek Holdings Pte, Cheung said.

The shift in the Chinese operator’s strategy may mean it is following the model of Singapore Telecom, which started with minority stakes in India’s Bharti Airtel Ltd and Philippines’ Globe Telecom Inc and increased these holdings over time, he said.

Shares of Hong Kong-listed China Mobile Ltd have lost 8.6 percent this year, compared with a 14 percent decline in the benchmark Hang Seng Index.

Foreign banks’ efforts to build brand awareness in China’s mass market are starting to bear fruit but their brand images still lag behind their Chinese counterparts, Nielsen said in a survey finding on Monday.

Nielsen surveyed more than 11,500 Chinese consumers in 18 cities between April and December last year.

Nielsen found an increase in consumers’ unaided recall of foreign bank brands in Shanghai, Guangzhou, Beijing, Chengdu and Shenzhen ?? the five major cities surveyed.

Shanghai recorded the highest recall rate for foreign banks, followed by Guangzhou and Beijing.

The survey also found a significant year-on-year increase in the number of consumers in major cities preferring foreign banks for investment products.

In second tier cities however, more work is needed on brand awareness for foreign banks, the survey found.

Of all image characteristics measured by Nielsen, foreign banks were rated higher than their local counterparts in the area of “representing social status and success”, which should help foreign banks further develop their premier customer segment.

The Nielsen study found overseas banks lagged behind their Chinese counterparts, in the view of local consumers, because they lacked an extensive ATM network and adequate product range.

Surprisingly “good service”, which overseas banks often boast, also found itself among the relatively lower ranked image measures for foreign banks.

“Foreign banks will be heartened that their expansion efforts are being noticed by Chinese consumers. However, there is still work to be done to encourage more Chinese consumers to knock on the doors of the foreign banks,” said Kenneth Lee, Executive Director of Nielsen China.

“To grow market share, foreign banks need to invest further in hardware such as ATM networks, and in more aggressive communications to develop stronger brand images,” he said.

Overseas banks have been allowed to have full access to China’s retail local currency market since the end of 2006. Since then, foreign players like HSBC, Citigroup, Bank of East Asia and Standard Chartered have expanded their market share in China by setting up local incorporations, adding networks, workforce, and services.

China Eastern Airlines Corp said on Tuesday that it plans to add 19 aircraft this year as it bids to shore up passenger and cargo transport to ride on the nation’s robust economic growth and the Beijing Olympic Games.

The Shanghai-based carrier said that it will put into use 17 Airbus SAS planes and two Boeing Co aircraft to tap the continuous growth of domestic transport demand, it said in its annual results statement.

The carrier also said it aims to boost passenger numbers 9.7 percent year on year to about 43 million in 2008 as it expects solid growth amid Shanghai’s construction of a pivotal air hub and the Beijing Olympics.

Cargo and mail volume is expected to climb 13.7 percent from a year earlier to 1.07 million tons and total traffic turnover may reach 8.8 billion ton-kilometers, according to the statement.

CHINA Eastern said today that it swung to a profit last year largely due to government subsidies and the yuan’s appreciation, which cut the value of its foreign-currency debt, despite higher fuel costs.

The carrier said net profit last year reached 586.46 million yuan (US$83.8 million), compared with a loss of 2.99 billion yuan in 2006. Gross revenue increased 13.92 percent year on year to 43.53 billion yuan.

Shares of CHINA Eastern added 2.78 percent to close at 11.46 yuan in Shanghai, compared with a 1.57 percent rise in the benchmark Shanghai Composite Index.

The carrier also said it will step up efforts this year to develop online ticket services, deepen the integrated cargo IT system and improve flight punctuality, according to the statement.

“The yuan’s appreciation will likely help the air carrier continue to book a profit in the first quarter,” said Tao Wei, an analyst with CHINA International Capital Corp. “But the industry’s growth is set to decline and costs pressure for the company will grow bigger in the longer term.”

The daily average oil prices of the Organization of Petroleum Exporting Countries (OPEC) surpassed 104 U.S.dollars per barrel (dpb) for the first time and set a new record of 104.02 dpb on Monday, the Vienna-based cartel announced on Tuesday.

The previous record of 103.74 dpb was set on April 10. After one day’s slight retreat to 103. 67 on Friday, the prices rose without hesitation on the first trading day of this week and surpassed 104 dollars.

Experts said the soaring oil prices were mainly driven by large amount of speculation.

Meanwhile, oil prices in the United States rose to 110.75 dpb on Monday afternoon following the news of a temporary shutdown of a major oil pipeline in the country. With the exchange rate between the euro and the dollar standing higher than 1.58, the prices were further boosted.

However, OPEC officials said that the market was well-supplied and oil demand in the upcoming months would even decline.

Four Chinese oil companies were among 35 companies that qualified to participate in Iraq’s coming licensing round for oil and gas contracts, the Iraqi Oil Ministry said on Tuesday.

A statement issued by the ministry said that CNOOC China LTD, CNPC, Sinochem and Sinopec Group won rights to bid tenders to develop oil and gas fields in Iraq.

From 120 applicants around the world, only 35 companies and consortia, were qualified in accordance to criteria put by the Iraqi Oil Ministry, according to the statement.

It said that these companies “can participate in the coming licensing round for planned oil and gas fields which will be announced in due time.”

The list contains names of various world oil firms, among which there were seven U.S. companies, including oil major Exxon Mobil Corp. and three British, including giant BP Group PlC.

Iraq will invite the qualified oil companies to bid for oil and gas service contracts in all Iraq’s regions soon, an official in the ministry’s media office told Xinhua by telephone, without specifying a date.

Oil firms that failed to qualify for the first round could still compete for qualification for the second and later rounds, the official said.

Early in January, Iraq’s oil ministry had asked international oil companies to register with the newly set-up Contracts and Licensing Office of the ministry and set Feb. 18 as the final day for receiving registration documentation.

It said only qualified firms can bid for tenders to develop Iraq’s vast oil reserves.

Iraq oil reserves is said to be the world’s third-largest, which needs billions of dollars of investment to overhaul its oil industry infrastructure and increase oil and gas output after 13 years of sanctions and war.

Iraq produces around 2.3 million barrels per day (bpd) of oil, but has more than 115 billion barrels of proven crude reserves, it was reported.

FAW Group, a leading Chinese auto maker, said on Tuesday that it sold 444,112 motor vehicles in the first quarter, up 35.4 percent year-on-year.

The sales were equivalent to those for the first four months of last year and met 25.7 percent of the company’s annual sales goal, which was 2.9 percentage points higher than the year-earlier level.

The total included 144,852 motor vehicles sold by FAW Volkswagen, up 48.7 percent, and 95,000 by FAW Toyota, up 74.4 percent.

In March alone, sales reached 179,461 vehicles, up 37 percent year-on-year. Sales growth was 33.7 percent for cars, 58.1 percent for medium- and heavy-duty trucks and 38.7 percent for light trucks.

According to the company, FAW Volkswagen ranked first in March among auto makers with sales of 54,279 passenger vehicles, up 34.2 percent year-on-year.

March automobile sales included 20,396 Jetta cars, up 12.2 percent and 9,218 Audi cars, up 5.4 percent.

March also saw FAW Toyota sell 15,457 motor vehicles, up 74.4 percent.

Minister of Commerce Chen Deming said on Tuesday that export growth had slowed but remained in a reasonable zone, while the impact of the sub-prime crisis would be closely monitored.

China’s import and export situation was “relatively satisfactory” and excessive panic was “unnecessary,” Chen said at the ongoing Canton Fair in the southern city of Guangzhou. The fair opened on Tuesday.

His comments followed Friday’s release of first-quarter customs figures that showed China’s quarterly trade surplus had contracted 10.8 percent year-on-year to 41.42 billion U.S. dollars.

Analysts attributed the rare decline in the surplus to weakening external demand caused by the spreading credit crisis. The swiftly rising yuan and export policy adjustments were also factors, they said.

Chen acknowledged that those factors, plus global consumer price index rises, had combined to have “some effect” on exports. Anticipation of higher prices led many consumers around the world to reduce discretionary spending, said analysts.

Chen vowed to keep a close eye on the international instability factors, including the credit crisis’ impact on finance and market in the United States and Europe, and consumer confidence in those markets.

In the first three months of 2008, China’s exports rose 21.4 percent year-on-year to 305.9 billion U.S. dollars, which was 6.4 percentage points lower than the growth rate in 2007’s same period.

Changes in the export structure by destination and product would be closely followed, said Chen.

He said that gains in exports to the United States had slackened while those to the European Union, Japan and new markets were on the rise.

Meanwhile, exports of labor-intensive products like textiles, garments, suitcases, shoes and toys saw much slower increases but were still rising, he noted.

The government has curbed certain exports by cutting export rebates or imposing export taxes. Efforts to cut the production and export of products from smokestack industries would not be reduced, he stressed.

The Canton fair, or the China Import and Export Fair, is a biannual export-promotion event held in Guangzhou, capital of Guangdong Province.

This year, 514 foreign companies from 51 countries and regions will take part. This year’s fair runs from April 15-30.

China would refund value-added tax (VAT) levied on some of PetroChina and Sinopec’s imported oil products between April 1 and June 30, the Ministry of Finance (MOF) said in a statement on its website on Tuesday.

The MOF said the move had been approved by the State Council, China’s Cabinet.

These oil products included 500,000 tonnes of gasoline and 1 million tonnes of diesel oil from PetroChina, the country’s largest oil producer, and 500,000 tonnes of gasoline and 1.5 million tonnes of diesel oil from Sinopec, the country’s largest refiner, said the statement.

However, the statement did not mention the details of how the value-added tax would be first paid and then refunded to these two oil companies.

Some industry experts said that government-controlled oil prices in the domestic market has led to the recent shortfall of oil supply, as refineries cut back production to avoid losses against the backdrop of crude oil price rise globally.

Current VAT rate on gasoline and diesel import is 17 percent.

The country’s demand for oil products is surging this year, stimulated by the quick pace of economic development, the Spring ploughing season and restoration work in snow and ice hit areas this winter in south China.

Figures showed that the country’s net oil product imports stood at 5.47 million tonnes in the first quarter, up 31.8 year on year.

There was market hearsay last week that Sinopec was applying for a rebate of three-quarters of its value-added tax on its crude import to offset a larger refining deficit.

Before that, the company also applied to postpone handing in a special oil gain levy and cut the import tariff on product oil. Experts say that if it does, the policy could reduce the refiner’s cost by 12.75 percent, which will be helpful for Sinopec’s suffering refineries.

Encouraged by the news, PetroChina (PTR.NYSE; 0857.HK; 601857.SH) A-share closed up 0.89 percent to 17.06 yuan per share and Sinopec (SNP.NYSE; 0386.HK; 600028.SH) A-share ended up 1.66 percent to 11.00 yuan per share.

Wall Street opened higher Tuesday with investors encouraged by a surprising rebound in the New York area manufacturing index and a strong growth in profit from Johnson & Johnson.

The New York Federal Reserve reported that regional manufacturing reading expanded modestly in April, after shrinking at a record clip in March. Economists had expected another contraction.

Health care and personal products maker Johnson & Johnson said its first-quarter profit increased 40 percent due to the rise in sales and a slight decline in costs, which provided some solace to investors after a spate of mostly disappointing earnings reports last week and Monday.

The U.S. Commerce Department’s Producer Price Index, however, registered a much higher than anticipated 1.1 percent rise for March, nearly triple the rate that had been expected. But the core inflation, excluding food and energy prices, rose by just 0.2 percent.

The Dow Jones rose 77.02 points to 12,379.08. Broader indexes also climbed. Standard & Poor’s 500 index climbed 9.02 points to 1,337.34 and the Nasdaq rose 14.65 points to 2,290.47.