'Brand China' takes aim at global electronics giants

World Bank urges China to hike interest rates
Beijing (AFP) June 18, 2010 - The World Bank on Friday urged China to raise interest rates to curb soaring property prices and rampant borrowing by local governments, which the bank warned were potential risks to the economy. The bank also downplayed concerns over a "wage-inflation spiral" in China after Beijing launched a round of minimum wage hikes and several foreign-backed factories raised salaries in response to labour unrest. "The gains from letting interest rates play a larger role in monetary policy are likely higher than the costs," the World Bank said in its latest quarterly update on the world's third-largest economy. Interest rates in China were significantly lower than expected rates of return on "property and physical investment", fuelling over-investment and real estate speculation, it said.

Official concerns that higher interest rates would attract massive capital inflows seemed "overdone", it added. Beijing has delayed raising interest rates partly due to concerns it could attract speculative money chasing a relatively higher yield, complicating its efforts to keep the Chinese yuan stable. Instead, authorities have preferred more targeted measures to curb torrid bank lending, which reached 9.6 trillion yuan (1.4 trillion dollars) in 2009, and runaway real estate prices to thwart inflationary pressures and economic overheating. However, Wang Qing, a Morgan Stanley economist based in Hong Kong, said an interest rate hike looked unlikely this year as signs of economic overheating have ebbed.

"Currently economic activities are slowing down and the inflation index has hit a peak level and is easing. So there is no need for interest rate hikes," he told AFP. The World Bank, which provides financial and technical aid to developing nations, also reiterated its view that a stronger currency would help contain inflationary pressures and rebalance the economy. China has effectively pegged the yuan at about 6.8 to the dollar since mid-2008, which critics say gives its exporters an unfair trade advantage. While core inflation remained low, the bank said major risks to the Chinese economy were rising asset prices, financial strains on local governments that have borrowed heavily to fund infrastructure and other projects, and bad debts. The recent wave of wage hikes around the country -- by the government and factories responding to labour disputes -- were "part of a cyclical issue" and were "within historical norms", the bank said.

"Given the flexibility of China's labour market and the track record of China's overall manufacturing sector in absorbing wage increases ... this is unlikely to set in motion an unwarranted wage-inflation spiral," it said. After expanding 11.9 percent in the first quarter, the bank said it expected the Chinese economy to grow at a slower pace over the rest of 2010. The bank maintained its forecast for China's gross domestic product to surge 9.5 percent this year, much higher than the government's own target for 2010 of around 8.0 percent and the 2009 growth rate of 8.7 percent. A slowdown in government-backed spending this year would be partly offset by strong real estate investment and robust household consumption, it said.

by Staff Writers
Singapore (AFP) June 20, 2010
After decades building its reputation as the go-to country for electronics manufacturers, China's intention to promote its own brands and produce the world's next Sony or Samsung was obvious during a massive telecoms exhibition in Singapore.

While foreign giants such as Apple, Dell and Nokia have taken advantage of China's vast pool of cheap labour to manufacture or assemble their products, the country's own electronics firms are now looking to make their presence felt in the global marketplace.

Chinese firms led by heavyweights Huawei Technologies and ZTE Corporation flew the Asian giant's flag proudly at the massive annual CommunicAsia and BroadcastAsia trade fairs in Singapore, signalling the rise of a new power in the industry.

They were the top foreign exhibitors with 257 booths displaying everything from sleek tablet computers to slim mobile phones with Chinese branding, proof that the country is not just a cheap production centre for Western firms.

Once dominated by European and North American brands, the global telecoms industry is now more fragmented, and Chinese companies have joined the Japanese and South Koreans on the front lines of the battle for Asian and global market share.

Finland's Nokia is still the world's biggest mobile phone manufacturer, followed by Samsung and LG Electronics, the twin giants of South Korea's high-tech industry.

One of the most popular Chinese brands is Huawei Technologies, which had a massive booth at CommunicAsia displaying its mobile phones and tablets.

And beyond consumer devices, Chinese firms are also supplying digital encoders and receivers to the telecoms industry.

Technology consultancy IDC said the global telecom industry is now worth 1.5 trillion dollars a year, with the mobile sector accounting for than half of the total.

"More and more Chinese companies are paying more attention to the exhibitions overseas," said Tina Feng, who is in charge of international sales with Chengdu Dexin Digital Technology, a wireless equipment maker.

"You know, China has developed very fast so they can supply high-quality stuff now, and they want to show it through their products," she told AFP, beaming with obvious national pride.

She said her company, just a visitor to the show in 2008, decided to exhibit for the first time this year after spotting plenty of opportunities to reach out to new markets.

"There are many customers from Asia so our company hope to enlarge this market," Feng said.

"It's been rather busy for us at the show. We should be back next year again," she smiled.

Chinese participation at this year's show, which ended Friday, jumped 21 percent from 2009 and the interest is not only coming from the major players, according to organiser Singapore Exhibition Services (SES).

"It is not just the Huawei or the ZTE that you are talking about but you see a lot more group participation, and you also see a lot more of the medium-sized enterprises taking part," said Victor Wong, SES project director for communications events.

They were also the largest foreign exhibitor last year, but only by a small margin, said Wong.

Prior to that, the United States had the biggest number of foreign booths in 2008, but American firms were a distant second at this year's show with 179 exhibitors.

"I think one of the reasons for them to come out is they want to export, they find that it is really worthwhile for them to do so because if you continue to do stay in China, you can only compete on price," he said.

"I think we have confidence that the Chinese participation will continue to grow," Wong added.

Alan Yin, a regional sales director with Chinese electronics company Konka Group, is convinced his country has what it takes to produce the world's next Samsung, Sony or Motorola.

"In the past years, we have learnt technology from the Western countries but now a lot of Chinese companies have invested a lot in research and development in the high-tech area.

"I am sure in the next 10 or 20 years later, Chinese companies will be stronger," Yin said.

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US welcomes China currency move, but doubts persist
Washington (AFP) June 19, 2010
US President Barack Obama welcomed China's decision Saturday to make its yuan exchange rate more flexible, saying it would boost global economic recovery from a battering financial crisis. "China's decision to increase the flexibility of its exchange rate is a constructive step that can help safeguard the recovery and contribute to a more balanced global economy," Obama said in a statement. ... read more

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