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Round-up Report
JANUARY 2004
MII expects China’s IT sales to reach US$25.3 Bn in 2004(Jan 26, 2004)
Sales of China’s computer software and industrial application software products are expected to grow 30% year on year to US$25.3bn in 2004, according to the MII.
This compares to China’s total 2003 software sales reaching US$19.3 Bn, with exports of US$1.8 Bn. China’s software exports mainly consisted of two areas: contract software for coding (parentheses) and programs embedded in telecommunications equipment to serve export markets.
At present, China has 8,582 software companies, 18,000 kinds of products and six software industrial parks located in Beijing, Shanghai, Xi’an, Nanjing, Chengdu and Hangzhou.
Shenzhen tops in foreign trade and exports(Jan 26, 2004)
Shenzhen, the first special economic development zone (SEZ) established in China, also home to a population of 6 million people, has continued to be the No.1 area for foreign trade and export volume for the past 11 years.
During 2003, the city’s foreign trade volume increased 34.58% year on year to US$117.4 Bn, including US$ 62.96Bn in exports, a 35.24% year on year growth. Direct foreign investment amounted to US$5.04Bn, representing 9% of the total investment in China.
There are nine Multinational Corporations’ regional headquarters and 26 R&D centers in Shenzhen. Benefiting from its foreign trade business, Shenzhen’s GDP was recognized with the highest growth rate (15%) and the highest GDP per person (US$5589) in China.
SMIC gets US$285 million loan from 4 Chinese banks(Jan 26, 2004)
Shanghai-based Semiconductor Manufacturing International Corporation (SMIC) recently got a US$285 million loan from four Chinese banks in Shanghai-- Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications and the Shanghai Pudong Development Bank. This is the second time that SMIC has signed a loan agreement with these banks. The first loan was for US$480 million in Dec. 2001.
As one of the most advanced foundries in China, SMIC provides integrated circuit (IC) manufacturing at 0.35-micron to 0.18-micron technologies to various companies including Japanese Elpida Memory, Infineon, Fujitsu and Brillian.
The entire investment in SMIC to date has been about US$3Bn. SMIC aims to use this loan to expand the capacity of SMIC’s three 8-inch fabs in Shanghai, as part of its fast expansion plan. Recently, SMIC’s US$1Bn IPO plans on the New York and Hong Kong stock exchanges had to be postponed after TSMC sued it over patent infringement and trade misappropriation.
Sina and Yahoo form JV for on-line auctions (Jan 19, 2004)
Sina, China’s No.1 Internet service provider and Yahoo, the world’s largest Internet portal recently announced a joint venture to provide online auction services. The service will be available by the middle of 2004 and will carry the joint brand names of both companies.
The tie-up will enable Sina and Yahoo to share their strengths and resources, notably Yahoo’s technology and experience in internet service and Sina’s popularity and success in China.
China’s Internet users grew 34.5% year-on-year to 79.5 million by the end of 2003 with 22% using broadband access, according to data from CNNIC. The cooperation between Sina and Yahoo is expected to contribute significantly to China’s e-business development.
China auto growth rate to slow in 2004 (Jan 19, 2004)
China’s automobile output growth will slow in 2004, according to the People’s Daily. Automobile growth in 2004 will be around 20% and the entire output will be 5.1 to 5.34 million units: 2.5-2.62 million Sedans and vans, 1.31-1.37 million trucks and 1.29-1.35 million buses.
In 2003, the total vehicle output increased 35.2% year on year to 4.4 million units, which enabled China to dwarf Germany and become the world's third largest automobile producer after the United States and Japan.
During 2002 and 2003, 10 new automobile factories began production resulting in a big jump in output. Experts explained that there are few automobile factory expansion plans slated for 2004, which should result in a slow down in China’s automobile production growth rate in 2004.
TCL targets higher TV and Handset sales (Jan 19, 2004)
TCL international, China’s TV and Handset manufacturing giant, recently announced its sales targets for 2004 with 14.4 million TV sets, 11 million handset units and 720 thousand PC units.
During 2003, TCL’s TV sales reached 11.7 million units - 2 million more than expected. Since teaming with Thomson SA in the second half of 2003, TCL aggressively expanded its TV production and sales both in the domestic and overseas markets.
TCL international’s stock has increased 38% in the last three months on the HK stock exchange and its parent company plans to list on the Shenzhen stock exchange on Jan.30, 2004.
China Telecom teams with Legend on Broadband Networks (Jan 12, 2004)
China Telecom, China’s No. 1 fixed-line phone operator, and Legend Group, China’s No 1 PC maker, announced plans to work together in the development of broadband networks in technology, sales and customer service operations.
Based on the announcement, Legend will preinstall software in Lenovo and Legend PCs to enable their users to have default network connections to China Vnet - an ADSL-based broadband operated by China Telecom. Legend’s service support arm—Sunny Information Technology Service Inc., will also be China Telecom’s customer service agency for broadband services. By the end of 2003, China Telecom had over 7.5 million broadband users. The strategic partnership between the two giants should boost broadband development and services in China.
China Telecom also announced that it will be a member of the Government-backed Intelligent Grouping and Resources Sharing Network (IGRS) which was initiated by Legend and 3 other top Chinese companies. The group aims to develop China’s home-grown standard connectivity software and hardware in order to enable default connections for ADSL, Cable and mobile networks.
China’s CEO confidence index rises (Jan 12, 2004)
China’s CEO confidence index increased 8.1% year-on-year to 133.7 points in the fourth quarter of 2003, up 3% over the third quarter, based on data released by the National Bureau of Statistics of China (NBS). The index in the previous three quarters was 129.6 in Q3, 115.4 in Q2 and 132.5 points in Q1 of 2003.
China’s CEO confidence index is calculated based on CEOs’ views of business conditions, investment and employment. The index for 2003 had an average year-on-year growth of 5% in the areas of manufacturing, construction, transportation, retailing, computer and telecommunications. A survey of China’s foreign executives also showed an extremely confident 148.2 points. A score of 100 indicates an economy that is neither growing nor contracting while any score over 100 suggests growth.
The rise in the index underscores the relief in China’s economy from the recovery of SARS and China’s CEOs optimism in continued economic growth.
China’s total phone users reach 532 million (Jan 12, 2004)
China’s total phone users reached 532 million in 2003 with revenues of roughly US$62 Bn, according to the MII. Mobile phone subscribers climbed to 270 million with an increase of 63 million users and a 42.6% increase in domestic production of handsets; fixed-line phone subscribers increased 49 million to reach a total of 252 million. As a result, the phone penetration rate for all of China now stands at 41.3%.
The MII expects to have 52 million new mobile phone users and 40 million new fixed-line users in 2004, amounting to a 48% telephone penetration rate nationwide in China.
China’s handset growth continues (Jan 5, 2004)
China’s handset manufacturing keeps growing. From January to November, 2003, the total production of handsets in China increased 49% to 145 million units while sales of handsets grew 48.3% to 140 million units, according to the MII.
Through the end of November 2003, China’s 37 local handset makers produced 41.43 million units with sales of 40.98 million units. At present, China’s local handset makers have won 55.47% domestic market share. The top 4 local Chinese handset makers are Bird, TCL, Konka and Soutec.
Chartered teams with ZTE on Switch and Router ICs (Jan 5, 2004)
Chartered Semiconductor Manufacturing, one of the world’s top semiconductor foundries and ZTE Corporation, one of China’s largest telecom equipment manufacturers, recently announced that they will work together on producing integrated circuits targeting switches and routers.
The products will utilize Chartered's proven BiCMOS and analog processes and production is planned for the first quarter of 2004.
This cooperation looks to offer mutual benefits as Chartered will provide localized solutions to ZTE to help them get their domestic and international products to market faster, and it will help Chartered itself to get a better understanding and feel for China’s semiconductor market.
China becomes world’s biggest Notebook maker (Jan 5, 2004)
China’s notebook manufacturing sales achieved 5.36 million units in the third quarter of 2003 according to an MII report, accounting for 52% of global notebook sales which reached 10.36 million during this quarter.
The top five global vendors are: HP, Dell, Toshiba, IBM and Acer, according to IDC’s report. All these vendors have notebook manufacturing operations in China to take advantage of China’s high quality, lower cost resources.
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