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Asia: global nexus
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SENIOR economists and officials attending the current Fortune Global Forum 2001 here said Wednesday the Asian economy will meet more development opportunities than challenges in the future, despite the slowdown of the world economy and problems in some Asian countries.
Based on this projection, they said the growth of the world economy will be mainly seen in Asia in the next 20 years.
Henry Paulson, chairman and chief executive officer of Goldman Sachs Group, said China is expected to maintain the fastest growing economy in Asia after China enters the World Trade Organization (WTO).
According to Donald Tsang Yam-kuen, chief secretary for administration of the Hong Kong Special Administrative Region, Hong Kong adopts a duty-free policy, which allows more freedom for economic activities than in European and American countries and Japan, and attracts an average of 35,000 people from the other parts of the world everyday for various purposes.
The mainland's accession to the WTO will bring about enormous business opportunities, and this is expected to increase Hong Kong's annual economic growth rate by one percentage point to about five percent, Tsang said.
In the process of economic globalization, Paulson said the development of the US economy is of great significance to Asia. He projected a one-percent growth rate of the US economy for the first half this year, adding that the rate might be higher in the later half.
Paulson was worrying about the economic situation in Japan where there is a big financial deficit and non-performing debts of banks have created social burdens. He said he could not see much reason for the Japanese economy to recover in a short time.
Michey Kantor, former US secretary of commerce and trade representative, noted that efforts should be made so China can enter the WTO at an early date, saying China's WTO membership is not only an economic issue but also a political one.
Asia-Pacific: key player on world economy
The Asia-Pacific region will continue to be a key and dynamic player on the world economic stage, and the crucible for change and progress in the coming economic era, said Thai Prime Minister Thaksin Shinawatra in Hong Kong on Wednesday.
Delivering a keynote speech at the ongoing 2001 Fortune Global Forum, Shinawatra pointed out that Asia and the Pacific is home to over three billion people, with the economies combined representing one third of the global economy, and owning more than half of the world's monetary reserve assets.
“We are a growing market for capital goods, technology, consumer products, semi-finished goods, and raw materials needed to promote and sustain rapid economic and social development growth," he said. "Our market continues to expand with improvements in income levels and development growth."
On the other hand, Shinawatra said, Asia must accelerate, sustain and enhance equitable socio-economic growth to alleviate poverty and raise the quality and standards of living of its population to an appropriate and acceptable level.
The Thai prime minister noted that the pace of change and new realities demand new pragmatic and realistic policies and action programs to ensure that Asia will once again become a key and constructive player on the world trade and financial arena.
In the new economic century, to deepen and widen economic development, Asia must reexamine and reposition its development strategy to co-operate and collaborate with each other more closelyin trade and development to produce and create new products of world class quality, he said.
He stressed that responding appropriately to new challenges and new lifestyles will be crucial in creating a new paradigm of national development based on globalization and localization.
Asia must quickly and actively participate in protecting and making use of its vast bio-resources, and expand its co-operation and research capabilities to keep abreast of ongoing and innovative advances as well as the convergence in IT and bio-technology, he added.
Shinawatra noted that Asia is currently facing the challenges of knowledge-based economy, global competition, innovation and convergence of new technologies, and poverty alleviation as well.
“If history is to be our guide, the west sought and benefited much from Asia's fabled riches and its wide variety of offerings," he said, referring to the tales of Marco Polo and the silk road that used to be dreams of explorers and backbone of the East India and China trade.
Asia must once again seek to rekindle that bounty, he stressed.
“If we fully co-operate and collaborate with each other in expanding intra-Asian trade, as our European and American friends do among themselves, Asia will have taken the very first serious step in the right direction, thus bridging the great economic and trade divide," the Thai prime minister said.(Xinhua)
Software industry needs to get real
SOFTWARE firms in China and India cannot merely rely on being low-cost service providers if they are to develop “true'' software industries, said Charles Wang, chairman of the US-based enterprise software giant Computer Associates International Inc.
China, and on a much larger scale India, have developed software services industries that exploit the engineering talents of their respective vast countries, although Wang said neither has developed a major industry in software products.
“That is not the way that you can build a true software industry,'' Wang said during an interview on Wednesday on the sidelines of the Fortune Global Forum event in Hong Kong.
“You must one day start to export software to be a software industry, as opposed to being the lowest cost provider on the food chain,'' he said.
Otherwise, Wang said, ``one day, somebody else will come in and be cheaper.''
He predicted that in a few years the six joint ventures Computer Associates has set up in China will ``bear fruit'' and begin exporting products. The firm's joint venture partners include personal computer giant Legend Holdings , Shanghai Telecom and the Ministry of Public Security.
Asia accounts for about 12 per cent of Computer Associates' revenue, with China its second largest Asian market after Japan.
Sanjiu expands overseas
MAJOR Chinese pharmaceuticals producer Sanjiu Enterprise Group aims to boost its business abroad as part of its ambitious expansion plans, chief executive Zhao Xinxian said in Hong Kong.
The Shenzhen-based Sanjiu, one of the country's best-known drug firms which controls three China-listed companies including Shanghai Rubber Belt, is due to open its first traditional Chinese medicine clinic in Vancouver this month using the franchise model of US fast food giant McDonald's, Zhao said.
“We want to learn from McDonald's," he told Reuters in an interview on the sidelines of the Fortune Global Forum in HongKong late on Tuesday.
“To become big, Sanjiu must seek development abroad," said Zhao, adding that he hopes the company will be included on the Fortune 500 list of the worlds largest companies within 15 years.
Sanjiu is aiming to establish 100 franchised clinics in the United States, Europe and Hong Kong over then next three years, said Zhao, a former military officer and an entrepreneurial legend in China who established Sanjiu in Shenzhen with a five million yuan (US$604,100) loan in 1985.
To aid the development of the franchised clinics, the firm, now with 16.3 billion yuan in total assets, would set up three traditional Chinese medicine production bases abroad, he said.
Most of Sanjiu's 2000 sales of 8.0 billion yuan which generated gross profit of 1.2 billion yuan were from the domestic market, Zhao said. Traditional Chinese medicines accounted for 70 per cent of domestic sales and Western medicines the remaining 30per cent.
Sanjiu expects to record double-digit growth in sales and profits this year, after enjoying average annual growth of around 30 per cent since 1985 on the back of aggressive domestic sales expansion, Zhao said.
Since the end of last year, Sanjiu had opened more than 500 franchised traditional Chinese medicine stores across China and the number would rise to 1,000 by the end of 2001, he said. Five years from now, Sanjiu would have 10,000 such stores, Zhao said.
Sanjiu intends to acquire more mainland China-listed companies and has just acquired a controlling stake in Shanghai Rubber through an asset swap. Its two other listed units areSanjiu Medical Co and Sanjiu Bio Pharmaceutical.
It is still preparing to list its subsidiary Sanjiu Pharmaceutical (Hong Kong) Co Ltd in Hong Kong's stock market, Zhao said but did not give any further details.
Employing more than 20,000 people, Sanjiu is also keen on developing its fledgling financial business, he said.
Zhao said Sanjiu was in talks to buy into a mainland Chinese securities house after setting up China's largest financial leasing company -- the Shenzhen Financial Leasing Company -- in late 1999. Sanjiu also has a stake in a domestic property insurance company.(SD News)
Chinese brands stand up to titans
AS leaders of the world's large firms gathered in Hong Kong at the Fortune Global Forum, business people here warned Wednesday that their international brands face increasingly tough competition from local brands in China.
Chairman of Ogilvy & Mather Asia Pacific Miles Young said, "Over the last two years, Chinese brands have been getting their act together with dramatic results." They have put money into image building in advance of China's admission into the WTO, he added.
Manufacturers and providers of branded goods and services, from banking to insurance to autos to pharmaceuticals, will face more and more competition from their big-spending local rivals, they believed.
A recent study by Ogilvy & Mather Asia Pacific showed that the new generation of the Chinese brands have very strong emotional pulling power on consumers, which owes much to their image as Chinese brands made by Chinese people for Chinese people.
According to BrandZ data, a Hong Kong-based proprietary brand database which measures consumer brand loyalty, seven of the top 10 brands are local, including China Telecom, Mudan Credit Cards, Industrial and Commercial Bank of China, Sofu.com and Legend Computers, which rank well above McDonald's and Coca-Cola.
Young cautioned that it is simply not enough for foreign-owned and foreign-managed brands to "think global, act local". Instead, they must be seen to be local by locals, he said.
As this data shows, they believed that China will create strong domestic brands in finance, banking, telecom and technology sectors, which is expected to be opened up to foreign competition after China's entry into the WTO.(Xinhua)
Chinese i-market excites business leaders
DESPITE worries about world economic slowdown, business leaders attending the Fortune Global Forum expressed confidence in the fast growing Chinese information market and believed it will be an ideal choice for their investment.
More than twenty world business leaders made appearance at the roundtable focused on the potential of the Chinese information market after China joins the World Trade Organization.
The attendees agreed there are huge development potentials for the Chinese information market and, in the coming one or two decades, it will witness unpredictable development, and will be a preferred investment choice for multinationals across the world.
In the last one or two years, high-tech bubbles have burst one after another, leading to sharp falls on high-tech stocks prices and the economic slowdown in the US, Japan, Europe and the world as whole, said James S. Morgan, Chairman and President of Applied Materials, Inc. USA.
However, he said, the Chinese economy exceptionally maintains high growth and offers opportunities for development of world high-tech enterprises. "People see no signs of an economic slowdown in China."
“The downturn on the world economy has not affected multinationals' investment in China's technology industry," Morgan said, adding that international investors have found development opportunities in China and their returns are expected to increase dramatically in the future.
Wang Zhidong, CEO of Sina.com, said his company got listed on the stock market and he has invested all the US$100 million raised from the listing in exploring the Chinese market.
China has maintained unparalleled growth rate and the best way to avoid a "high-tech bubble burst" is to invest in China, he said.
Jorma Ollia, President and CEO of Nokia Corporation, said his company has invested US$1.7 billion in China and will increase its investment, in particular, in research and development projects.
Delegates to the roundtable believed that the Chinese technology market has huge potential for development. In the past year, many big companies reduced their investment overseas, but did otherwise in China, they said.
Foreign investment in China in the future will concentrate on infrastructure building and the training of people, business leaders at the forum predicted.
Duan Yongji, general manager of the Zhong Guancun Science Corp,Beijing, said that China is aiming to update its traditional economy with advanced digital technologies and a large number of talents are needed for this purpose.(Xinhua)
Calming of tensions called
TOP corporate chiefs called on Wednesday for a calming of tensions between Washington and Beijing, as a meeting between Bill Clinton and President Jiang Zemin evoked memories of happier relations.
Both sides had too many business opportunities to squander by talking tough, the chairmen and CEOs at a Fortune Global Forum said. Peace, stability and the absence of tensions in Asia were needed as a foundation for economic prosperity, they said.
“If we have that, we will continue to progress,'' said Goldman Sachs Vice Chairman Kenneth Courtis. ``The financial markets will take care of themselves.''
Heightened tensions over last month's collision between a US spy plane and a Chinese fighter jet and a new round of US arms sales to Taiwan have complicated the environment for foreign companies doing business in China.
Courtis, whose firm hopes to sell billions of dollars of shares floated by Chinese State-owned firms to US institutional investors this year, said corporate executives ``need to be huge spokespersons for globalization and free trade''.
New complications
The administration of President George W Bush is taking a harder line toward China than Clinton did when he was president, and it ordered last week the review of all US government contacts with China.
Two years ago at the 1999 Fortune Global Forum in Shanghai, corporate executives engaged in a love-fest with the mainland, gushing over what seemed like boundless opportunities in market of 1.2 billion consumers as China entered the Internet Age.
The highest profile business fallout from the latest round of tensions has been a delay in the signing of CDMA telecom network equipment supply contracts between China Unicom Group and several major Western firms, including US technology giants Lucent Technologies.
China Unicom was expected to announce contracts for some US$2.46 billion worth of gear but delayed the signings.
CDMA vulnerable
Irwin Jacobs, chief executive of Qualcomm Inc, the US company that developed the CDMA technology to be used by the Unicom Network, told Reuters there was a “correlation between the timing of the signing of the contracts and the rise in tension".
He expected the contracts to be signed soon, but said the long-awaited deployment of China's first CDMA network could be vulnerable to further flareups.
“If there were a sudden further increase in tensions, it could affect the ability to move ahead. I don't think that will be the case, but I'll be much more comfortable when the contracts are signed.''
Like a number of executives attending the forum, Applied Materials Inc chairman James Morgan said he believes tensions are waning and relations will improve as the Bush administration fills middle- and lower-level positions in the cabinet and State Department with China experts.
The head of the semiconductor manufacturing equipment maker, which has been selling into China for 15 years, said better relations would help the United States and China ``grow the pie'' for both countries.
“Engagement is the key to meeting most of the objectives that both countries have,'' he said.
Old friends meet
Engagement was Clinton's mantra in dealing with China during his eight years in office, and the former US president pushed through a landmark trade deal which ended annual congressional review of China's trade status and brought Beijing a step closer to World Trade Organisation membership.
Clinton and Jiang met for about an hour at Jiang's hotel in Hong Kong and both sides described the talks as friendly.
"This is a private meeting. We're not going to say much. But he's not carrying a specific message from the Bushadministration," Clinton spokesman P J Crowley said.
“He worked together with Jiang for eight years to build arelationship that benefited both the American and Chinese people," Crowley said. "He believes it is in the long-terminterest for US-Chinese relations to improve."
President Jiang Zemin's speech on Tuesday was all business -- he focused on China's growth potential and business opportunities over the next five years, including Beijing's plans to import US$1.4 trillion worth of equipment, technology and other products in the period.
He stressed China's determination to push economic reforms, open its markets further and secure entry to the World Trade Organization.
Dell Computer Corp Chairman Michael Dell, who hails from President George W. Bush's hometown of Austin, Texas, said he discussed the subject with Jiang, but did not elaborate.
“I was impressed with his knowledge of our industry,'' Dell said.
AOL Time Warner Chief Executive Gerald Levin said Jiang was interested in “the importance of the technology and opportunities for raising the standard of living in China. The social implications of the new media was very much on his mind."
(SD News)
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