Wanna support American workers? Buy imports. So says a new report, which claims that a cheap, robust imports marketplace not only helps American workers and families, but local farmers, manufacturers, and small businesses as well. You may not have noticed, but last week was promoted as something called “Imports Work Week.” The celebrate the importance of imports in the U.S., a group of business associations led by the National Retail Federation (NRF) has released a study showing the many ways that imports benefit American consumers and businesses alike. Cheaper prices are the most obvious benefit. “In the past decade, the price of television sets sold in the United States has dropped 87 percent. Computers have gone down 75 percent, toys 43 percent and dishes and flatware by a third,” the NRF’s Jon Gold explains in a blog post. “Why? The answer is easy – imports.” (MORE: Bangladesh Factory Collapse: Is There Blood on Your Shirt?) But the benefits don’t stop there, according to the study, which runs down how imports also help farmers, mom-and-pop businesses, working-class Americans, and even U.S. manufacturers. Here are a few of the groups that should love what imports do for them, per the report: • Imports improve American families’ standard of living. They help families make ends meet by ensuring a wide selection of budget-friendly goods, like electronics we use to communicate and many clothes and shoes we wear, and improve the year-round supply of such staples as fresh fruits and vegetables. • Imports support more than 16 million American jobs. A large number of these import-related jobs are union jobs, held by minorities and women, and are located across the United States. • More than half the firms involved in direct importing are small businesses, employing fewer than 50 workers. • American manufacturers and farmers rely on imports including raw materials and intermediate goods to lower their production costs and stay competitive in domestic and international markets. Factories and farms purchase more than 60 percent of U.S. imports. (MORE: Patriotic Consumer’s Dilemma: Hard to
The European Commission agreed to impose punitive import duties on solar panels from China in a move to guard against what it sees as dumping of cheap goods in Europe, prompting a cautious response from Beijing which called for further dialogue.
EU commissioners backed EU Trade Chief Karel De Gucht’s proposal to levy the provisional duties by June 6 and make Chinese solar exports less attractive, two officials said.
Shares in German manufacturers SolarWorld, Phoenix Solar and Centrotherm rose sharply, while China’s Suntech fell heavily.
The investigation into accusations of dumping is the biggest the commission has launched, but Brussels is trying to tread a careful path, knowing it needs China, the EU’s second largest trading partner, to help the bloc pull out from recession.
China’s ambassador to the World Trade Organisation, Yi Xiaozhun, called the decision a mistake although he declined to comment on any possible retaliation.
“It will send the wrong message to the world that protectionism is coming,” Yi told Reuters in Geneva on Wednesday.
China’s Commerce Ministry on Thursday called for dialogue. “We don’t want to see a trade war between the two sides and we hope the EU can cautiously make the ruling decision on China’s solar panel products,” spokesman Yao Jian told reporters.
Given that Germany and France are seeking to increase exports to China, De Gucht will try for a negotiated solution with new Chinese Commerce Minister Gao Hucheng before an EU deadline in December to cement the levies for up to five years.
That could mean agreeing a minimum price at which all solar panels makers selling in Europe adhere to, diplomats said.
The EU duties, which will come into effect once the commission publishes the decision in its Official Journal, will be set at an average of 47 percent, officials said.
Trade specialists from all 27 EU countries will be consulted on May 15 at a meeting in Brussels and are expected to back the decision, although their position is non-binding.
The European Commission declined to comment.
Chinese solar panel production quadrupled between 2009 and 2011 to more than the entire global demand. EU producers say Chinese companies have captured more than 80% of the European market from almost zero a few years ago, exporting 21-billion euros (US$27-billion) to the European Union in 2011.
As a result, Chinese-made panels are as much as 45% cheaper than those made in Europe, industry executives say.
Europe accounted for half of the global market in 2012, which was worth US$77-billion, according to research firm IHS.
The commission started its investigation in September, taking up a complaint by a group of mainly German and Italian companies led by SolarWorld, which was once Germany’s biggest solar group but now has 900 million euros in liabilities. Its smaller rival Q-Cells filed for insolvency last year.
The tariffs would deal a major blow to Chinese solar panel makers, especially smaller ones, if implemented, said Jason Cai, chief analyst at Shanghai-based consultancy Solarzoom.
Cai said he would expect the panel makers to face tariffs of differing levels.
“But if the tariff hit 47%, nobody would be willing to export to Europe,” he said.
The United States levied its own duties on Chinese solar energy products in 2012, arguing that China’s rapid expansion into the industry had created a massive oversupply.
Solar is the leading source of renewable energy after hydro and wind, and companies are in a race to win contracts as countries seek to limit pollution and global warming.
Germany was the world’s biggest market last year, followed by China, Italy and the United States, according to the European Photovoltaic Industry Association. Germany installed more solar panels than any other country in 2012, at 7.6 gigawatts of newly connected systems, while China was second with 5 gigawatts.
Solar covers about 3% of Europe’s electricity demands but government support for developing the green energy source varies widely across Europe with the euro zone debt crisis dampening government support in Spain and Greece.
Europe’s stance on solar energy is complicated by the fact that some in the EU solar sector, notably importers and installers, support cheap panel imports from China.
They say EU tariffs would be damaging for efforts to develop clean energy. Some fear retaliation by Beijing.
“Protective duties are poisonous for the solar industry,” said Udo Mohrstedt, chief executive of Germany’s IBC Solar. “These guarding measures will endanger more than 70,000 jobs in medium-sized companies in Germany alone.”
© Thomson Reuters 2013
After weeks of rumors, Baidu finally confirmed today that it has acquired the online video business of Shanghai-based PPS for $370 million. PPS will be merged into iQiyi, Baidu’s video platform Baidu, to form China’s largest online video platform by the number of mobile users and video viewing time.
The sale is expected to close in the second quarter of 2013. PPS will continue to operate as a brand of iQiyi.
The deal allows Baidu to step up its competition with video platform Youku-Tudou. At the end of last month, before Baidu had officially announced the deal, Youku-Tudou president Dele Liu made a statement about his company’s competitors: “After the success and synergy created by the Youku Tudou merger, increasing consolidation was inevitable throughout the video industry. We are happy to see this purchase go forward, we expect this acquisition will further rationalize the industry and help reduce piracy in the sector.”
Despite the somewhat cheeky tone of Liu’s comment, the purchase of PPS does indeed position Baidu as a formidable competitor to Youku-Tudou, which was previously China’s biggest video site according to Analysys International.
Baidu’s purchase also underscores the importance of online video for Internet companies all over the world as they seek to sell more premium advertising, keep up with consumers’ viewing habits as they shift to online content, and take away market share from TV.
For example, reports of Baidu’s decision to purchase PPS emerged around the same time Yahoo made a $200 million bid to take a majority stake in Dailymotion, the “YouTube of France.” The deal was scuttled by the French government because it did not want a U.S. company taking a controlling stake in a French operation, but if it had gone through, the cash infusion would have helped Dailymotion compete with international rivals like YouTube while allowing Yahoo to build up its video offerings.
AOL (our parent company) also emphasized the importance of online video at the end of last month when it unveiled three new initiatives, including 15 original, unscripted shows; a new creative studio called Be On; and a deal with FreeWheel and Mediaocean. Of course, it remains to be seen if any of these initiatives prove to be as successful as Google’s prescient $1.65 billion acquisition of YouTube in 2006.
“The merger of iQiyi and PPS’s online video business is a major step toward consolidation in the industry and will contribute to the development of China’s Internet video industry. The merger will generate significant synergies, and will provide for an improved user experience as well as more and better content. It will also deliver better marketing value and a wider range of options for advertisers,” said iQiyi CEO Gong Yu in a statement.
Virologists in China have published a paper detailing how they created more than 100 hybrid viruses from H5N1 and the H1N1 strain that caused the deadly swine flu pandemic of 2009. The virologists wanted to see if any combinations would transmit between mammals—five did.
The study, published in the journal Science, comes exactly a year after the release of a controversial paper describing how the H5N1 bird flu could theoretically be modified to become human-contagious. At that time, the international community had called for a moratorium on similar research because of threats related to the virus escaping or the information being used for deadly purposes. Various outbreaks of H1N1 have, over the years, proven extremely dangerous. However, researchers argue we need to learn more about how these viruses mutate, and indeed how hybrids form in nature, to better tackle any future outbreaks.
The process by which hybrids form is known as reassortment, and it occurs when an individual is infected with two different strains. Genetic information is exchanged across the two to form a new and unique virus, exactly what happened in 2009 when a combination of different swine, avian, and human flus from across the globe merged. H1N1 in particular seems to reassort more readily and is highly infectious among humans. On the other hand, H5N1 (bird flu) is not typically infectious. The premise behind the study was to see if hybrids could create a more infectious strain of H5N1.
On March 16, in what appeared to be another case of Chinese espionage, FBI agents boarded a plane at Dulles International Airport to arrest Bo Jiang, a Chinese national with a doctorate in electrical engineering from Old Dominion University. Jiang, a former contractor at NASA’s Langley Research Center in Hampton, Virginia, had recently been let go by his employer because of pressure from Republican congressman Frank Wolf of Virginia. Wolf had claimed Jiang and other Chinese engineers employed by NASA contractors were a security risk. And that day, it seemed so—Jiang had a NASA-owned laptop in his possession, and was on a plane back to China.
But it quickly became apparent that Jiang was at worst guilty of violating NASA policies. There was no evidence of any sensitive material on the laptop, and Jiang didn’t have clearance to such projects at Langley as an employee of the National Institute of Aerospace. Instead, investigators found, the laptop was loaded with pornography and pirated movies. Since he had lost his job and his work visa was expiring, Jiang simply was going home—with a little entertainment.
A press release issued by Wolf after the arrest and copy of Jiang’s arrest warrant have since disappeared off the congressman’s website. In the release (cached by Google here), Wolf had said, “I am particularly concerned that (the) information (on Jiang’s laptop) may pertain to the source code for high-tech imaging technology that Jiang has been working on with NASA. This information could have significant military applications for the Chinese Peoples Liberation Army.”
For border officials in Hong Kong, baby formula trumps heroin.
Since the former British colony on March 1 restricted outbound travelers to two 2-pound cans each, a syndicate has been cracked and more people have been arrested for smuggling milk powder than were detained all of last year for carrying heroin.
The reason? Mainland Chinese demand, fueled by distrust of locally made food after product-safety scandals that included the deaths of at least six babies due to tainted milk. The U.K. and New Zealand are among countries with limits on milk sales as bulk purchases of brands such as Danone’s Aptamil and Mead Johnson Nutrition Co.’s Enfamil caused local shortages.
They want to be extra careful
“Most of them only have one child, and the child is the most important thing in their life,” James Roy, a Shanghai- based analyst China Market Research Group, said of Chinese parents, most of whom are subject to the government’s one-child policy. “They want to be extra careful.”
The crackdown on milk buyers gives Danone, Nestle SA, and Mead Johnson an opportunity increase their market share in China at the expense of domestic rivals such as China Mengniu Dairy Co. and Inner Mongolia Yili Industrial Group Co.
Sales of baby formula in China grew 29% to 95.2 billion yuan ($15.4 billion) last year, more than four times the size of the U.S. market, according to industry analyst Mintel Group. Milk powder retails at higher prices in mainland China, which excludes Hong Kong, Macau and Taiwan.
The country’s top five international sellers of formula — Danone, Nestle, Mead Johnson, Abbott Laboratories, and Wyeth LLC — will increase their market share by 5%age points this year to about 55%, China Market Research estimates.
Foreign formula brands are treated as luxury goods because of distrust for the local supply chain, said Stuart Roper, a professor at Manchester Business School.
“Baby milk scandals in China happened because of corruption, because regulation was very lax,” Roper said. “Until things change in China, and they’re not going to change overnight, only then will the consumer be able to feel assured.”
In 2008, at least 22 companies were found to have sold dairy products containing melamine, a toxic chemical that can make diluted milk appear to have a higher protein content. In 2011, Hohhot, Inner Mongolia-based Mengniu, China’s largest producer, said moldy cattle feed led to excessive toxin levels in its milk.
Mengniu fell 1.4% to HK$21.65 in Hong Kong trading, while Yili dropped 4% to 29.24 yuan in Shanghai.
Mengniu’s operating profit last year shrank 16% to 1.45 billion yuan as sales fell 3.5%. Food quality and safety incidents affected consumer confidence and sales, it said in a March 27 statement.
Glenview, Illinois-based Mead Johnson, which makes 30% of sales in China, saw operating profit rise 12% to $870 million last year on revenue that grew 6.1%.
“Food safety in China is a big worry for me,” said 30- year-old mother Helen Li, who gives her one-year-old son Danone’s Aptamil formula from Germany bought on the Internet or by traveling friends. “I feel more secure buying German products, more secure about their ingredients.”
New Zealand in September said it would limit “unlawful exports” of milk powder, with fines of as much as NZ$50,000 ($42,700). Supermarkets in the U.K. and Germany have also imposed restrictions.
Liu Ying, who lives in Germany, runs online shop “Mama Little P” on Chinese e-commerce portal Taobao.com, selling infant milk brands Aptamil and HIPP.
“It’s become very difficult to buy infant formula at the stores since last November,” the 33-year-old said by phone from a town outside Hanover, where she lives with her husband and 2- year-old son.
I feel more secure buying German products, more secure about their ingredients
Some shops limit her to one can, or ask to see her baby, so she drives to several stores a day, she said. She’s stopped taking orders, except from close friends and relatives, Liu said.
Online merchants on Chinese site Taobao have raised prices and the waiting period for overseas formula can be almost two months, said Li, the mother who buys German milk.
Six baby formula brands, including Karicare and others from Danone and Nestle, will be sold on Chinese e-commerce site Tmall, its operator, Hangzhou, China-based Alibaba Group Holding Ltd., said in an e-mail.
“It’s difficult to see any sign for weakening of the demand, at least in the short term,” Danone Chief Financial Officer Pierre-Andre Terisse said on a conference call with analysts April 16. Danone doesn’t plan to significantly increase imports from Europe and will broaden the product selection available in China, he said.
China had 81.6 million children under the age of five, Unicef estimated in a December 2011 report. That’s more than the population of France.
Danone reported first-quarter sales growth that beat estimates as China safety worries helped drive a 17% jump in baby-nutrition revenue. Vevey, Switzerland-based Nestle reported first-quarter infant-nutrition sales increased at least 10%, faster than the company’s overall growth.
Baby-food businesses have margins of about 25% in China, compared with 20% in the rest of the world, said Jon Cox, an analyst at Kepler Capital Markets.
A 900-gram (2-pound) can of Danone’s Dumex Precinutri formula for 6- to 12-month-old babies sells for 207 yuan ($33.57) at a Carrefour SA store in Shanghai. In Frankfurt, Germany, where Danone sells its Aptamil brand, an 800-gram can of a similar formula costs 13.49 euros ($17.62).
A 900-gram tin of Danone’s Karicare Gold+ Toddler formula for babies older than 1 costs NZ$21 ($17.94), at New Zealand online retailer The Warehouse. A similar item costs 190 yuan ($30.81) on Alibaba’s Tmall.
Many Chinese visit Hong Kong regularly to purchase items such as soap, cosmetics, milk and diapers because of lower prices and the concerns about quality at home. While the U.K. returned the city to China in 1997, Hong Kong retains a separate legal system and has autonomy over issues including public security and food standards.
When you talk about the health of your baby, it’s very hard to say to people: ‘you are overreacting’
Chinese authorities last month detained a distributor for repackaging milk powder. Yili last year recalled some formula after finding mercury in some of its products.
It’s not just milk that has Chinese consumers worried. Authorities in December said a former supplier to Yum! Brands Inc. had provided meat with too much antibiotics.
“Chinese consumers are so frightened and so sensitive to safety issues with milk powder that they are willing to pay a higher premium than consumers anywhere else,” Roy said. “Strong dairy brands understand this.”
Revenue at Danone’s baby-food business, which generates about 20% of the group’s sales, will grow 13% this year instead of an initial forecast of about 10%, Andrew Wood, senior research analyst at Bernstein said in an April 17 report. Danone says China is the division’s biggest market.
In Hong Kong, the milk-powder crackdown is keeping police and customs officers busy. Officials on April 8 said they had busted a syndicate that had more than 4,000 kilograms (8,800 pounds) of baby formula worth about HK$1.1 million ($141,700).
As of April 23, 879 people were arrested, with 8,841 kilograms of powdered milk seized, Calvin Lee, a press officer, said in an e-mail.
Last year, 420 people were arrested by border officials for having restricted drugs. Of those, 81 had heroin, 81 carried cocaine and 161 had ketamine.
“All these scandals that have happened are never good for any industry,” said Heiko Schipper, managing director of Nestle’s Greater China food and beverage division “I can understand the reaction. It may be a bit of an overreaction, but when you talk about the health of your baby, it’s very hard to say to people: ‘you are overreacting.’”
Tencent’s social blogging site, Qzone, has Asia’s largest active social network user base, with 600 million (and counting) users who log in more than twice a month.
I spoke to Peter Zheng, vice president of Tencent’s social network group. He’s been overseeing Qzone’s evolution for the past eight years. He told me that when Qzone was launched in 2005, it was initially planned as a Geocities-style blog community, before the company decided to add social aspects by linking blogs to users’ QQ accounts. “Luckily, when we started, Facebook wasn’t common in China. There were some challenges from other platforms like microblogs such as Weibo, but these [Twitter-like channels] are quite public, and people saw QZone as a more private space,” he said.
It wasn’t always supposed to be walled, but QZone inherited the company’s older QQ contact list that added people based on user IDs, not more universal identifiers like email addresses or phone numbers. And unlike what we’re used to on Facebook or LinkedIn for example, you can’t see who your friends’ friends are because of the way those lists were architected, said Zheng.
“For a while, we were concerned that that made it hard for people to expand their friends lists. Our legacy was closed, and we thought it hindered the expansion of the network,” he said. But it seemed to work out. “Over time, our users told us that they didn’t want to add contacts the way you do on Facebook. When everyone is added deliberately because you sought them out, you’re just adding buddies you want to share your updates with. Turns out that was a way to keep your friend circles tight, and our users are keener to share on Qzone because of that,” he said.
This is the mantra of some of the “private” sharing platforms like Path—some with more success than others—but Tencent seems to have stumbled upon the working formula and had its popularity multiplied by the sheer volume of users coming onboard in its home country.
Over 100 million users concurrently on Qzone, with most of them concentrated in China
Another way it has fueled its user growth is an early emphasis on the mobile phone. The Qzone app was released in early 2010, and included features like photo filters and the option to record voice memos. While a typical Twitter or Tumblr user would take a photo, open it in a separate app to dress it up, then open the blogging app to post it, all of this can be done within Qzone’s app, reducing the friction to post. (Instagram was launched towards Fall 2010.)
The Qzone app has also added features that caught on with Asian users earlier than they did in the West, such as decorative water marks. “Asian users like to decorate their photos, not just filter them,” he said. Qzone’s app also allows users to add a voice clip as a status update, or tag it to a photo. “That makes it feel more personal. You can send a gift and attach a voice clip from the phone too,” Zheng said.
When he showed me a typical Qzone page, I was boggled by how busy the page was, with animations and audio. “It’s almost like MySpace,” I say.
“Sort of,” he agreed. “But it isn’t really the form factor that matters the most. Maintaining the relationship with your existing user base and keeping them happy goes a long way. You want to be on the social network that your friends are on, and always keeping it fresh means users stay happy.”
Tapping the ideas of 22,000
It is here in Shenzhen’s hi-tech district that Zheng’s 2,000 or so engineers work on Qzone. The Tencent headquarters is a sprawling skyscraper, dwarfing its myriad grey-washed neighbors. While I had problems getting my cab driver to register exactly where I wanted to be in the already famous Hua Qiang Bei cluster, simply saying “Tencent” in English got him to immediately acknowledge, exclaiming “Teng Xun Da Sha”, which translates to Tencent Plaza in Mandarin.
Started in 1998, Tencent is China’s largest Internet company by revenue, and was the first Internet company in the country to break through the $1 billion revenue mark in 2009.
My arrival at the headquarters was kicked off with a tour of the impressive lobby showcase area. A big, gleaming board reflected how many users were concurrently on QQ—156 million that Wednesday afternoon, with a peak of 172 million. The company counts an active user as someone who logs in more than twice a month, and by that measure, has an impressively high retention rate of 700 million out of its 1 billion total users worldwide.
156 million users chatting on QQ instant messenger at the same time
“This is the same tour that our CEO, Pony Ma, gave to (Chinese Communist Party general secretary) Xi Jinping when he visited,” informed my guide in impeccable English. I asked her how long she’s been working for Tencent, and she said she’s been with the company for the past two years since she graduated. “I do not consider myself young here,” she said, shaking her head.
And perhaps she can’t. The average age of Tencent’s 22,000 employees is merely 26—a feat made possible by an aggressive, ongoing hiring campaign that takes Tencent to tertiary institutions in the country in order to sniff out their finest.
The constant influx of fresh blood could be one of the reasons why Tencent has kept up with China’s relatively young Internet population. China’s average age across its user base is just 25, while in the US, that number is much higher at 42.
How do you juggle ideas coming in from thousands of young, enthusiastic minds? “Unfortunately, you have to cancel projects if they don’t work after a certain time, usually several weeks or months,” said Zheng.
“There are no bad ideas, only bad execution. So we give all ideas a fair chance, but we look for teams with bad execution and we do kill their projects,” he said.
CALGARY • British Columbia newspaper publisher David Black said China’s largest bank has agreed to provide financial backing for his proposed Kitimat-based heavy oil refinery.
The refinery would cost $25-billion to build and all its output would be sold to Asian markets, Mr. Black said in a statement Thursday.
Mr. Black’s company, Kitimat Clean Ltd., and the Industrial and Commercial Bank of China (ICBC) signed a memorandum of understanding in which ICBC agreed to be the refinery’s Chinese financial advisor and cooperate in financing it and associated pipelines.
Chinese companies will be involved in the engineering and construction of the refinery, but ownership will remain in Canadian hands, Mr. Black said in the statement.
China’s financial backing removes the main hurdle to the project, which has been downplayed by the Canadian oil community.
“We are very pleased to be working toward a comprehensive agreement to finance a refinery in Canada which is planning to export refined fuels to China and other Asian countries in the future,” LIU Yanping, Deputy Head of Corporate Banking Department, and HUANG Jifa, Deputy Head of Investment Banking Department, said on behalf of ICBC.
David Black, owner of Kitimat Clean, said the refinery will prevent the shipment of bitumen in tankers off B.C.’s coast and reduce global greenhouse gas emissions by replacing other refineries with less stringent environmental standards.