Have You Heard…

• Taiwan drops request for U.S. military subs: source
• Coca-Cola volume improves, led by emerging markets
• China Shuts Ice Cream Makers for Tainted Milk Powder
• McAfee Issues Internet Security Report As China Closes Hacker Gang
• Shipping boosted by spike in exports

Taiwan drops request for U.S. military subs: source

Source: Reuters

Taiwan has effectively dropped a request for U.S. submarines to help shore up the balance of power with political rival China, a military source said on Tuesday, dissolving what could be a new rift in tense Sino-U.S. ties.

Defense officials on the island that has fallen behind in the military balance of power with China had agreed with Washington in 2008 to a study on upgrading Taiwan’s aging submarine fleet but will stop pushing the item to keep peace with Beijing, said a source close to the Defense ministry in Taipei.

“Taiwan isn’t asking for the submarines anymore,” the source told Reuters. “The biggest consideration was the warming of relations with mainland China.”

China has blasted the United States over a planned $6.4-billion arms package for Taiwan, saying it would place sanctions on U.S. firms that sell weapons to the island.

The package would include Patriot missiles and Black Hawk transport helicopters, also part of the 2008 agreement.

Taiwan still hopes to get advanced U.S.-made F-16 jets though, to boost its existing fleet to deal with China’s growing numbers of Russian-designed Su-30 and Su-27 fighters.

A submarine sale would further ignite Beijing’s anger toward Washington and could turn it against Taiwan, which has avoided China’s wrath over the recent arms proposal.

Taiwan has sought peace with China since Beijing-friendly island President Ma Ying-jeou took office in 2008, brokering a series of trade and tourism deals.

China has claimed sovereignty over self-ruled Taiwan since 1949, when Mao Zedong’s forces won the Chinese civil war and Chiang Kai-shek’s Nationalists fled to the island. Beijing has threatened to attack if Taiwan declares formal independence.

Taiwan’s navy includes four submarines, two of which date from World War Two and are now used only for training, according to GlobalSecurity.org.

China has more than 60 submarines, some capable of carrying nuclear ballistic missiles.

“My guess is that the submarine issue is sunk, never to surface again,” said Ralph Cossa, president of the U.S. think tank Pacific Forum CSIS.

Source article: http://www.reuters.com/article/idUSTRE6181AU20100209

Coca-Cola volume improves, led by emerging markets

Source: Reuters

Coca-Cola Co (KO.N) reported a quarterly profit in line with analysts’ estimates as strong volume in China, India and Brazil offset a decline in North America.

Lower costs also helped lift profit at the world’s largest soft-drink maker, which gained market share in both the carbonated and noncarbonated segments.

Coca-Cola shares rose 1.4 percent to $53.40 in premarket trading.

Results continued a trend for the maker of Diet Coke, Sprite and Dasani water, which has relied on strength overseas to offset a North American market that is beset by high unemployment and low consumer confidence.

“This continues to be a story about emerging market growth,” Morningstar analyst Phil Gorham said, noting “some really strong numbers in China and India, particularly when you (consider) that they are actually cycling a pretty strong quarter in ‘08.”

Coca-Cola said net income attributable to shareholders rose to $1.54 billion, or 66 cents per share, from $995 million, or 43 cents per share, a year earlier.

Analysts on average were expecting 66 cents per share, according to Thomson Reuters I/B/E/S.
Net operating revenue rose 5 percent to $7.51 billion. Analysts on average forecast $7.22 billion.

Overall sales by volume rose 5 percent, outpacing gains of 2 percent in the third quarter, 4 percent in the second quarter and 2 percent in the first quarter.

Coke’s growth in developing markets such as India and China has helped it weather a slowdown in the United States.

Fourth-quarter volume rose 7 percent in Latin America, 11 percent in the Pacific region, 1 percent in Europe and 5 percent in the company’s Eurasia and Africa divisions.

Volume fell 1 percent in the closely watched North American market, after losing 4 percent in the third quarter and 1 percent in the second quarter.

Coke’s rivalry with PepsiCo Inc (PEP.N) is poised for a new turn this year, as the No. 2 soft-drink maker is about to complete its planned acquisition of its largest bottlers, Pepsi Bottling Group Inc (PBG.N) and PepsiAmericas Inc (PAS.N).

Coke Chief Executive Muhtar Kent has repeatedly expressed his commitment to his company’s decentralized, franchise bottling model.

Coke’s sparkling beverage unit case volume increased 3 percent in the quarter, with international sparkling beverage unit case volume increasing 5 percent, cycling 4 percent growth in the prior year quarter.

Total still beverage unit case volume increased 9 percent, led by growth across a portfolio that includes juices and fruit drinks, teas and water brands. Still beverage unit case volume jumped 14 percent internationally but was flat in North America.

Source article: http://www.reuters.com/article/idUSTRE61829W20100209

China Shuts Ice Cream Makers for Tainted Milk Powder

Source: Bloomberg News

China shut three ice cream makers in the northern province of Liaoning for using materials tainted with the chemical melamine as the government widens its scrutiny of dairy-based products.

Liaoning Yachao Foods Ltd. and Yingkou Aoxue Foods Ltd. were shut after melamine was found in milk powder meant for use in ice cream production, Liaoning’s health bureau said in separate statements dated Feb. 5. Wuzhou Foods Ltd. was also shut, the bureau said in a statement dated Feb. 2. The Shenyang Evening News reported Yachao’s closure today, citing the government statement, which it said was issued yesterday.

China has recalled more than 170 tons of milk powder, arrested three people in Shaanxi province and shut factories nationwide after discovering that melamine-tainted milk powder ordered destroyed in 2008 had instead been redistributed. The recalls may undermine efforts to rebuild consumer confidence after tainted milk powder killed at least six babies in 2008.

“Incidents like these may be the last straw for consumers’ confidence in Chinese-made milk powder,” Jenny Chan, an analyst at Bank of China Ltd., said by phone from Hong Kong. January milk powder imports surged as the scandal widened, she said.

Melamine is a chemical used in the production of plastics that can also be used to make protein levels in watered-down milk appear higher. Milk powder tainted with the chemical killed at least six babies and sickened about 300,000 others in 2008, according to government figures.

Ice Cream Production

Liaoning shut Yachao after authorities found melamine in seven tons of milk powder intended for ice cream production, according to the local health bureau. Aoxue had 3.25 tons of melamine tainted milk powder, the health bureau said.

A Yachao employee who answered the company’s main phone line declined to give her name and said there was no one who could comment. An employee at Aoxue who answered the main phone line also refused to give her name and declined to comment. Calls to Wuzhou Foods weren’t immediately answered.

Since 2009, tainted milk powder has been found in food from popsicles to condensed milk, the official Xinhua News Agency reported Jan. 31, citing a meeting of a national task force on food safety. The Ministry of Health said this month it’s dispatched eight food safety inspection teams to 16 provinces.

Ningxia Closures

Authorities in northwestern China’s Ningxia province closed Ningxia Tiantian Dairy Co. after a police investigation found it had repackaged and sold more than 164 tons of milk powder tainted with melamine, the China Daily newspaper reported yesterday. About 170 tons of tainted milk powder that should have been destroyed in 2008 was given to Tiantian in July by an unidentified company as payment for debt, the newspaper said.

Tiantian repackaged and sold the powder to five factories in the provinces of Inner Mongolia, Fujian and Guangdong, the newspaper said, citing police investigations. Authorities have seized about 72 tons of the tainted powder and are tracking the remainder, according to the newspaper.
Another company in the province, Ningxia Panda Dairy Co., was also closed because of its relationship to Shanghai Panda Dairy Co., shut last year for selling tainted milk, the Beijing- based China Daily reported.

The closure of Tiantian and Ningxia Panda and the recall of milk powder was part of a 10-day nationwide crackdown on melamine-tainted dairy products, China Daily reported.

Melamine-tainted milk powder sold by Sanlu Group Co. sickened thousands of children in 2008 and prompted government tests that found the products of 22 dairy companies contained the chemical. Former Sanlu Chairwoman Tian Wenhua was jailed for life and three other people were given death sentences for their roles in the sale of tainted milk.

Some of the milk powder that was produced and seized in the wake of the scandal in 2008 was not properly destroyed and later sold, Xinhua reported on Jan. 31.

Source article: http://www.bloomberg.com/apps/news?pid=20601089&sid=alNNHAWTdQ_Y

McAfee Issues Internet Security Report As China Closes Hacker Gang

Source: China Tech News

McAfee’s “Q4 Threats Report”, issued today, shows that China is not the sole origin for zombie computer hacking attacks at the same time as Chinese authorities trumpet the arrest of a hacking gang.

Mike Gallagher, senior vice president and chief technology officer at McAfee Labs, stated: “China emerged as the worldwide leader in both zombie production and the execution of SQL-injection attacks, while Internet-based attacks played a bigger role and will continue to do so as cybercriminals target the most popular social destinations in 2010.”

According to McAfee, zombie production in the U.S. dropped significantly from 13.1% in the third quarter to 9.5% in fourth quarter, making China the top of Zombie-producing country at 12%. Brazil ranked third, with Russia and Germany rounding out the top five countries. Although SQL-injection attacks originate from a number of countries across the globe, China was by far the number one country hosting these assaults at 54.4%. Due to the growing popularity of Adobe applications, McAfee Labs saw a number of client-targeted attack attempts to exploit Flash and Acrobat reader.

Police in Hubei province in China has recently took down the Black Hawk Safety Net, a hacker training website that publicly provides illegal computer programs to its members. After about six months of investigations, the police sealed Black Hawk Safety Net, arrested three of its main suspects, froze more than CNY1.7 million in funds involved and confiscated nine severs, five computers, a Honda Accord car and related certificates.

Reportedly the largest hacker training website in China, Black Hawk Safety Net publicly offered various hacking technology services and provided thousands of trojan horse software applications to its paid members. Since 2005, the website has recruited more than 12,000 paid members and 170,000 ordinary members.

This is the second major case that Hubei police have identified since the Worm.WhBoy case was uncovered in 2007.

Source article: http://www.chinatechnews.com/2010/02/09/11547-mcafee-issues-internet-security-report-as-china-closes-hacker-gang

Shipping boosted by spike in exports

Source: By Zhou Yan and Xu Junqian (China Daily)

Container prices driven up by dramatic rise in seaborne freight

SHANGHAI: A frantic rush of outbound shipments has hit the country’s busiest port, Shanghai, on the eve of Chinese New Year following an unexpected spike in export orders.

“The outgoing vessels that mainly head for Europe and America have been over-booked since last December in Shanghai,” said Michelle Wang, deputy general manager of the ocean freight department for east and central China at UniLogistics, a privately owned Chinese freight forwarding company.

“We’ve seen the container freight price increase as high as $200 per Twenty Equivalent Unit (TEU) since the start of this year.”

According to Wang, the shipping price for cargo containers, on average, has risen three times on average a week since January.

China Containerized Freight Index (CCFI), the world’s only gauge tracking the container freight market, rose 7.7 percent in a month to stand at 1,081.67 points on Feb 5, reflecting the turnaround in international seaborne trade.

Among all international trunk lines, the Eastern America service has seen the highest increase at 11 percent during the same period.

“The recent super-spike of outbound container business has surpassed our expectations,” said Li Dong, an analyst at Zheshang Securities.

“It’s a very strained shipping capacity in the market, despite the price hikes on several occasions this year.”

Figures from Shanghai International Port (Group) Co (SIPG), the exclusive operator of all the public terminals in the port of Shanghai, showed that both the container transport turnover and freight throughput in December 2009 saw year-on-year growth for the first time after an 11-month consecutive decline.

The shipment spike amid the price hikes partly arose from the export boom on the back of the shaky recovery of major Western economies. It was also a result of the intention of shipping firms to lift prices via a curb on capacity and the reduction of the ships’ service speed during what is traditionally a slow season, said Yu Jianjun, an analyst at Huatai Securities.

“The city’s ocean-going shipping is in a hectic condition now, resulting from the fact that lots of container carriers withdrew capacity in tonnage last year after suffering huge losses, which in turn led to a current short-supply of freight space,” said a spokeswoman at Shanghai Quanmei Logistics Co, who declined to be named.

She added that the outbound container price per TEU has doubled in a month since the end of December.

The turnaround seems not to be short-lived though, as the export recovery is still on the way up, Huatai’s Yu said, predicting that export volume in the country, which has overtaken Germany as the world’s largest exporter, will leap 20 percent year-on-year in January, after a rise of 17.2 percent last December.

Guosen Securities estimated that the country will post 22 percent export growth in 2010, as a result of which, the total container transport turnover in the port of Shanghai will grow 9 percent this year.

Source article: http://www.chinadaily.com.cn/bizchina/2010-02/09/content_9449829.htm

Have You Heard…

• Fewer than 50 wild tigers left in China: expert
• China, Vietnam to set up new trade zone
• Disney, Google eye stake in China bus media firm
• Biggest hacker training site shut down
• More tainted milk found in latest crackdown
• NetEase suspends new user registration for hit game
• Cnooc Falls After Report of Possible Uganda Oil Deal
• Dongfeng offering own-brand sedans

Fewer than 50 wild tigers left in China: expert

Source: Reuters

China has an estimated 50 or fewer tigers left living in the wild, but efforts to stabilize one population in the bleak northeast are starting to pay off, a conservationist said on Monday.

Tigers once roamed huge swathes of China, right up to the now booming east coast. Their population has collapsed due to habitat destruction on the back of rapid economic development and poaching for tiger products to use in traditional medicine.

About 10 still live in the southwestern province of Yunnan, some 15 in Tibet, and 20 or so in northwestern Jilin and Heilongjiang provinces, said Xie Yan, China Country Program Director of the Wildlife Conservation Society.

The South China Tiger is probably already extinct, she told the Foreign Correspondents Club of China, ahead of the Chinese Lunar New Year of the Tiger, which starts on Sunday.

“The number of wild tigers left in China is very depressing,” Xie said. “We have less than 50 individuals in the wild. The populations in Tibet and in the south are still dropping.

“The northeast tiger is now stable, and maybe increasing a little, but the number is still very small,” she added.

SKIN AND BONES TRADE

Conservationists say the trade in skin and bones is booming in countries such as China, which has banned the use of tiger parts in medicine but where everything from fur and whiskers to eyeballs and bones are still used.

Skins sell as rugs and cloaks on the black market, fetching up to $20,000 for a single pelt.

Activists say tough laws and occasional well-publicized clampdowns cannot compensate for a crucial problem — the lack of strong and consistent enforcement.

Barely 3,500 tigers are estimated to be roaming wild across 12 Asian countries and Russia, compared with about 100,000 a century ago, conservationists say.

In December, a Yunnan court sentenced a man to 12 years in jail for killing and eating what may have been the last wild Indochinese tiger in China.

The Indochinese tiger is also on the brink of extinction, with fewer than 1,000 left in the forests of Laos, Vietnam, Cambodia, Thailand and Myanmar.

Xie said the Tibetan and Yunnan tigers have the bleakest futures, as their populations are both tiny and isolated.

The northeast tigers, though small in number in China, are far more numerous just across the border in Russia, where around 500 still live in an area with a far lighter human presence.

“We think that the best hope for wild tigers in China is in the northeast, because it is connected to the bigger population in Russia,” she added.

“The rest of the populations are too small and not connected,” Xie said of the Yunnan and Tibet tigers.

Source article: http://www.reuters.com/article/idUSTRE6171B220100208

China, Vietnam to set up new trade zone

Source: China Daily

South China’s Guangxi Zhuang autonomous region and Vietnam have approved a framework agreement to establish a new cross-border economic zone in the latest effort to further boost economic and trade cooperation between China and its Southeast Asian neighbor.

It is part of broad efforts to further enhance bilateral economic ties between China, the world’s third-largest economy – one of the fastest-growing economies in the world – and the Association of Southeast Asian Nations (ASEAN) following the establishment of the China-ASEAN free trade area (FTA) earlier this year.

The framework plan for the new cross-border economic zone between Dongxing, a city administered by Fangchenggang, a port city in Guangxi, and Mong Cai city, the largest border trade zone in northern Vietnam, was approved by the Guangxi regional government. Administrators are now applying for approval from the central government, Mo Gongming, mayor of Fangchenggang, told China Daily on the sidelines of a local legislative session last month.

Mo added that the plan was approved by the Vietnamese government in 2009. Nguyen Anh Dzung, consul general of the Consulate General of Vietnam in Nanning, confirmed the approval of the plan by Vietnam at a reception marking the 60th anniversary of the establishment of the diplomatic ties between Vietnam and China in Nanning on Jan 30.

According to the initial plan, the new cross-border zone will cover about 4 square kilometers in Mong Cai city and about 5.8 square kilometers in Dongxing city in the first phase. Dongxing hopes to expand the size of the Dongxing section of the zone to around 13 square kilometers in the future, said Liu Quanyue, mayor of Dongxing.

Dongxing, the only Chinese city with both land and sea borders with ASEAN, has a total area of 540.7 square kilometers and a population of 110,000. Mong Cai, a key Vietnamese city open to the outside world with preferential government policies, has a total area of about 520 square kilometers and a population of about 100,000.

According to the plan, the new economic zone is designed to replace the current 4-square-kilometer cross-border economic zone in Dongxing approved by China’s cabinet, the State Council, in 1992, said Mo.

The mayor of Fangchenggang added the new zone would be isolated from residential areas, unlike the existing one.

“We are positive about the new cross-border economic zone,” Nguyen said. “It’s a new concept and a new pattern of cooperation for both sides. The two sides need to have more discussions on specific policies as well as the content and scope of the cooperation.”

“A joint team has been established to push for specific cooperation between Dongxing and Mong Cai and China should speed up the process of cooperation,” said Liu.

A second bridge will be built on Beilun River on the border between China and Vietnam as part of the new infrastructure to further boost border trade in the future Dongxing-Mong Cai economic zone, Mo said.

The current bridge, erected in 1958, now can hardly meet the needs of significantly increased passenger and cargo transportation with the establishment of the China-ASEAN FTA and rapid development of the Guangxi Beibu Bay economic zone.

In 2009, nearly 4.9 million people crossed the Dongxing border, rising from about 4.6 million in 2008, according to the mayor of Dongxing.

The volume of trade between China and Vietnam through the Dongxing-Mong Cai border reached $2.4 billion and $4.1 billion in 2007 and 2008 respectively, the highest among the China-Vietnam border gates.

“We hope the planned Dongxing-Mong Cai economic zone allowing more free movement of capital, peo ple and cargo, can play an important role in facilitating trade between the two cities, boosting China-Vietnam economic ties and enhancing China-ASEAN cooperation,” Liu said.

Source article: http://www.china.org.cn/business/2010-02/08/content_19389258.htm

Disney, Google eye stake in China bus media firm

Source: Reuters

A consortium led by Walt Disney Co is in advanced talks to buy into China’s largest in-bus digital media and advertising company, a deal that could offer the U.S. entertainment giant a new platform to promote Mickey Mouse in China, three sources told Reuters.

Google Inc, the world’s No.1 Internet search company, which threatened to quit China last month over censorship and hacking concerns, was among investors in the Disney-led consortium, the sources said on Monday.

The consortium planned to buy a stake of between 30 and 40 percent in Bus Online for more than $100 million via a purchase of old and new shares to be issued by the company in private placements, said the sources.

“Disney wants to be a strategic partner not just a financial investor in Bus Online as Disney is going to do many things in China — for example, the theme park to be opened in Shanghai,” said one of the sources. “To Disney, the deal is not just about sharing in the growth of China’s advertising market but more about the promotion of Disney, the brand itself, and this is strategically important to Disney in China.”

In November, Disney’s made a breakthrough deal to build one of its signature theme parks in Shanghai, marking a major advance for Western media and entertainment companies seeking to crack the tough Chinese market.

Senior executives of Disney are expected to fly to Beijing to meet Chinese media regulators to discuss Disney’s long-term development plan in China including the Bus Online deal, said another of the sources.

GOOGLE IN FOCUS

In the wake of its recent problems in China, Google is finalizing a deal that will let the U.S. National Security Agency (NSA) help it investigate a corporate espionage attack that may have originated in China.

Beijing has already warned Washington not to make the Google incident political, in addition to other growing sources of friction between the two nations, including Tibet, Taiwan, yuan appreciation and Sino-U.S. trade.

Google was expected to take only a small stake in the Bus Online deal, while Disney aimed to take the greater part, said the sources, adding that no agreement had been signed yet.

The sources briefed on the possible deal declined to be identified as the negotiation process is confidential. Bus Online, headquartered in Shanghai, declined to comment.

A Google spokeswoman said the company could not immediately comment. Disney could not be immediately reached for comment.

Bus Online is China’s No.1 in-bus digital media and advertising company, with revenue of about 314.5 million yuan ($46.07 million) in 2009.

Since 2004, the company has received a total of $80 million from venture capital funds and banks including IDG, Yangtze Fund, China Renaissance Capital Investment and CCB International.

Bus Online is the exclusive partner of state broadcaster CCTV and the official Xinhua news agency for in-bus media content and advertising.

Yum! Brands’ fried chicken restaurant chain KFC would sign a deal with Bus Online to allow the Chinese company to set up screens in KFC’s more than 2,000 outlets across China, said the sources.

Disney expected to provide media content to Bus Online for its partnership with KFC in China on the condition that Disney and Bus Online agreed on the equity stake investment first, they said.

Source article: http://www.reuters.com/article/idUSTRE6171KC20100208