Monday, September 22, 2008

S China club fire kills at least 43, injures 88

Police have detained 13 people in connection with Saturday's nightclub fire that left 43 people dead and 88 injured in south China's Shenzhen city.

Five of the 43 had been confirmed to be from Hongkong, according to the spokesman of the local authorities.

Police said the legal representative of the unlicensed club, Wang Jing, turned herself in on Sunday afternoon after the general manager, vice general manager, safety officer, technician and performers, were detained.

Wang, 41, a native of central Hunan Province, fled after the accident, police said.

Five officials would be punished, including Huang Hai, vice director of Longgang District, and Jiang Wei, head of the fire department of Longgang police bureau, according to the local department. They are also proposed to be deposed by the local government.

The fire broke out at about 10:49 p.m. at the "King of the Dancers" club in Longgang District, when more than 300 people were watching a performance in a hall, district head Zhang Bei said on Sunday.

As of 11 a.m. on Sunday, 59 of the injured, four in critical condition, were being treated in hospital and six others were under medical observation.

An initial investigation by the police showed that fireworks set off during the performance ignited the flammable material in the ceiling. The fire then spread quickly across 150 square meters.

The nightclub had a hall and 10 chambers with a capacity of 380 people. The hall, on the third floor of a marketplace, was accessible from the staircase by only a narrow passageway, about 10 meters long. Several windows were sealed.

"I saw people rushing out at about 11 p.m. and all lights were off," said club employee Yang Zhi. "Many people were hurt in the stampede."

Yang soaked his clothes and ran out, but suffered burns on his neck.

The fire was extinguished that night.

Shenzhen Communist Party of China chief Liu Yupu asked medical staff to do everything possible to save lives and ordered district-wide safety inspections.

An investigation team of officials from the country's work safety watchdog, the Ministry of Public Security, and the provincial and local governments, has been set up.

Another devastating nightclub fire, which occurred on Dec. 25, 2000, in Luoyang City of the central Henan Province, claimed 309 lives.

The blaze started on the second basement floor of a four-story building. The fourth floor housed an unlicensed nightclub.

The dense fumes flooded into the nightclub where hundreds of people were having a Christmas party.

Most of the people died of suffocation due to inadequate fire-fighting facilities and exits. The club had been warned of unqualified fire-fighting system three years before.

This fire is considered to be the second worst in China since 1990. The death toll was second to the 325 killed in a theater fire on Dec. 8, 1994, in Karamay, northwest China's Xinjiang Uygur Autonomous Region.

Among the dead were 288 schoolchildren, 37 teachers and staff members, and 180 were injured.

The fire started in the Friendship Theater as 796 were watching a performance by students when a spotlight set fire to the curtain. The blaze caused a short-circuit that put out all the lights.

The fiber decoration materials quickly ignited and gave off suffocating toxic fumes.

Seven of the theater's eight emergency exits were locked at the time, and the persons with the keys had left their posts.

The local government said the officials who organized the activity failed to check the safety facilities beforehand or conduct an effective evacuation after the fire broke out.

Source: Xinhua

Space mission makes final preparations before liftoff

Three Shenzhou VII astronauts and their backups arrived in Jiuquan Satellite Launch Center yesterday, marking final preparation for China's third manned space mission.

The main crew members of Zhai Zhigang, Liu Boming and Jing Haipeng are scheduled to meet the press in a brief session that will go live on national television on Wednesday afternoon, after the JSLC authorities' official announcement of the mission's launch date and time.

A structure consisting of a spacecraft, Long March II-F rocket and escape tower were transferred to its launch pad at 3:15 pm on Saturday.

The 58.3-m-high body of the Shenzhou VII and its carrier rocket, slated for takeoff later this month, was transported to its launch pad on a 1.5-km-long heavy rail line, Xinhua News Agency said.

The transfer lasted more than one hour. More than 20 meteorological workers reportedly monitored the process, as the transfer had to be conducted with a wind speed of under 10 m per second.

The manned spacecraft Shenzhou-7 will be launched at an appropriate time between Sept 25 and 30, engineers said.

China successfully put two manned spacecraft into orbit in 2003 and 2005, respectively, becoming the third country to send an astronaut into space after the United States and the former Soviet Union.

Source: China Daily

Measures designed to assist SMEs

The central treasury is implementing six measures this year to help small- and medium- sized enterprises meet the challenges they face, according to the Ministry of Finance.

The ministry will earmark 3.51 billion yuan worth of special funds to help the growth of SMEs, it announced earlier this month. The measures include:

Guiding SMEs to adjust their growth model. SMEs have been encouraged to adjust their corporate structure, save energy, cut emissions and further explore the domestic and overseas markets. The public service system for SMEs has also received a boost.

The fund valued at 500 million yuan dedicated to the development of SMEs this year has been allocated, up 25 percent from last year. About 1.2 billion yuan, or 20 percent more than last year, has been set aside for exploring the international market. The subsidy for improving the public service system for SMEs, summed at 110 million yuan, has been prepared.

Supporting SMEs in starting business and in technological innovation. A technological innovation fund, valued at 1.4 billion yuan, has been earmarked, representing 27 percent growth from last year. An additional 300 million yuan has been directed to commercializing agricultural technological results.

Building the credit guarantee system and improving the financing environment for SMEs. The central treasury has granted greater support to credit guarantee institutions and guided them to actively serve SMEs.

Implementing tax incentives. Starting this year, the corporate income tax became standard at 25 percent for both domestic and foreign enterprises. For some small or marginally profitable enterprises that meet certain criteria the rate is reduced to 20 percent. For some hi-tech companies, the rate is 15 percent.

To help textile and garment enterprises, many of which are SMEs, cope with their difficulties, the export duty rebate rate on textile and garment products was increased from 11 percent to 13 percent in August, which result in a half-year total rebate of 10 billion yuan.

The Ministry of Finance will formulate regulations for government procurement targeting SMEs. Governments at various levels will be encouraged to procure from SMEs.

Sorting out administrative charges and eliminating irrational charges to lessen the burden on SMEs. A decision was adopted on September 1 to stop collecting industry and commerce administration fees and market administration charges, which mostly benefits SMEs.

The country has about 40 million SMEs, including those run by individuals. They have become the economy's most dynamic factor, accounting for about three-fourths of the urban employment.

Yet many labor-intensive SMEs have encountered difficulties this year as a result of slower export growth amid global economic doldrums, rising labor costs, an appreciating Chinese currency and increasingly expensive raw materials.

Experts said the measures are meant to improve the climate for the development of SMEs and to guide them on the path of industrial improvement and technological innovation to realize sustainable development.

Zhang Yansheng, director of International Economic Research Institute of National Development and Reform Commission, said China is at the stage of restructuring its comparative advantages. Against the background of an appreciating yuan, higher costs of labor and production materials have become inevitable.

The only way out for SMEs, he said, is to adjust and make products with higher technology and value.

Source: China Daily

Special funds open for applications

Special funds allocated for this year for the development of small- and medium- sized enterprises are open for applications to promote restructuring, technological innovation, market exploration and brand building.

The announcement was made by the Ministry of Industry and Information Technology and the Ministry of Finance earlier this month.

The funds are also for promoting the development of credit guarantee institutions and for helping SMEs in areas hit by the massive earthquake in May, as well as SMEs in some difficult industries such as textiles.

The capital is to be used mainly in fixed-asset investment, subsidies for credit guarantee services for SMEs and subsidies for those attending the China International Small and Medium Enterprises Fair.

In the fixed-asset investment category, SMEs can apply the funds for:

Structural adjustment. Crucial is the adoption of new products, new technology and craft, and the promotion of industrial upgrades, industrial transfer and technological innovation in saving energy and cutting emissions.

Services for industrial clusters. The keys are technology innovation in providing technology, testing services and centralized pollution treatment to SMEs.

Construction projects in regions and industries experiencing difficulties. The keys are in comprehensive exploitation of resources and reconstruction projects in the regions worst hit by the May earthquake. The keys also include technology innovation of textile SMEs with propriety brands and substantial export potential.

Projects for creating jobs, with the focus on labor-intensive and agricultural produce processing and innovation in enterprises serving the manufacturing sector.

The sum of free subsidies should not exceed 6 percent of the fixed-asset investment or the entire capital invested by the enterprise itself.

As for credit guarantee services for SMEs, subsidies will go to the institutions actively providing such services and to the types of services with relatively low rates charged.

The subsidy for each project in the category should not exceed the sum of 1 percent of a single credit guarantee project valued under 3 million yuan and 0.5 percent of a single credit guarantee project valued under 8 million yuan in 2007.

In the above services, if the charging rate is 30 percent lower than banks' basic lending rate, the credit guarantee institution will receive additional subsidy no higher than 0.5 percent of the contract value. Any subsidy for each enterprise should not exceed 3 million yuan.

Finally, those attending the China International Small and Medium Enterprises Fair, excluding those from Hong Kong, Macao and Taiwan, will receive subsidies for the cost of booths.

Each SME attending the fair will receive 3,000 yuan for renting each standard booth. Those from the 51 counties worst hit by earthquake, will receive an additional 3,800 yuan for renting each standard booth.

SMEs applying for the fund should submit documents in both electronic and paper forms.

Source: China Daily

Bank mulled to support smaller companies

China is considering setting up a small- and medium- sized enterprise bank to help the country's myriad smaller companies overcome financing difficulties.

Sources with China National Development and Reform Commission revealed that the NDRC is currently joining with other government departments and organizations to discuss and study the possibility of establishing a SME bank.

The government departments and organizations include the Ministry of Finance, People's Bank of China, and China Banking Regulatory Commission.

But the NDRC has yet to make a timetable for the establishment of the country's first SME bank.

Discussions to establish a SME bank came after more than 67,000 smaller enterprises went bankrupt because of global economic conditions in the first half of this year.

More than 10,000 of those that went bankrupt were labor-intensive producers in the country's textile industry.

It is projected that more than two-thirds of the country's textile companies will have to restructure to meet new demands.

Banks across the country have granted loans valued at more than 2.2 trillion yuan to Chinese companies this year, but only about 300 billion yuan, or 15 percent of the total, went to SMEs.

In response, the China Banking Regulatory Commission issued a notice urging banks and other financial organizations in the country to change their policies and grant more loans to SMEs, according to an official from China Banking Regulatory Commission

The official hopes banks and financial groups will establish a partnership strategy with SMEs to help them overcome their difficulties in financing and fundraising.

Suggested moves include opening multiple channels to raise funds, further lowering thresholds for SMEs to apply for loans and providing better financing services.

Many banks have promised to further simplify procedures for SMEs applying for bank loans in the coming years.

The Chinese government expects that the country's SMEs will play an increasingly important role in China's economic growth, so preferential policies will be formulated for taxes, land use rights, loans, financing, employment, foreign trade and the expansion of Sino-foreign co-operation.

"That means SMEs on the Chinese mainland will be able to enjoy many more preferential policies for development in the near future," an NRDC official said.

Source: China Daily

Outlook brisk despite challenging times

Some of the small and medium-sized enterprises in China facing operational crises have walked out of the shadow with a basket of positive policies from the central and local governments.

Industrial insiders believe that the prospect of SMEs remains brisk despite the negative market elements due to strong government support and timely strategic restructuring.

According to the latest statistics released by the National Development and Reform Commission, SMES polled around the country achieved 6.58 trillion yuan industrial output in the first five months of this year. Their profits increased by 30.8 percent from a year ago to reach 625.8 billion yuan.

The textile sector, where a majority of the companies are SMEs, recorded a year-on-year growth of 17.4 percent in sales and 8.4 percent surge in profits during the period from January to May.

A previous survey showed that at least 67,000 SMEs in China suffered losses or even closed in the first half of this year and two-thirds of the textile SMEs needed restructuring. At the same time, more than 20 million workers were laid off.

However, the survey also showed that nearly 20,000 SMEs were founded in China by June 30 this year.

Shui Pi, a senior commentator, said the nation has launched a package of policies, including finance, tax and credit, to help SMEs out of the operational difficulties.

"The central government has fully addressed the major problems of SMEs, such as raising the export tax rebate for labor-intensive industries including textile and increasing the credit limits to the SMEs," he said.

Some local governments, especially in the coastal provinces home to numerous SMEs, have launched incentive policies to stimulate the development of SMEs.

In East China's Zhejiang province, the government allocated 65 million yuan to serve as a risk compensation fund so that SMEs could get extra loans of 26 billion yuan from the financial institutes.

The government of South China's Guangdong province promised to allocate 40 billion yuan in the next five years to support SMEs and remove the barriers for SMEs to get loans easily.

Liu Pin'an, a senior researcher with Guangdong Academy of Social Sciences, said polices are working on some of industries, including hardware, garments, food, textiles and electronics, which are back to the normal track.

"Our surveys show that the improving support from the government has received wide recognition from SMEs," Liu said.

China's SMEs, which are still weak in global competition without self-owned intellectual property rights and brands, have been struggling to survive in the adverse markets including the shrinking demands from the major importers, price increases for raw materials, rising labor costs and appreciation of the yuan.

Source: China Daily

Banks expected to strengthen private business services

China Banking Regulatory Commission has undertaken frontline investigation to solve the lingering problem of funding for small and medium-sized enterprises . The research results will be handed in to the State Council.

"Under tightened monetary policies, we should pay more attention to satisfy the funding demands for SMEs that comply with the industrial development arrangement," said Yang Jiacai, an official with CBRC, when conducting the market surveys in Shenzhen.

"We will encourage the national banks and other banking institutes to expand their network and services and improve their risk management to grow up with the SMEs," he noted.

Liu Yuan, director of CBRC Shenzhen bureau, said "alleviating SME's loan difficulties should be regarded as a social responsibility of the banks".

By the end of June, outstanding loans to SMEs in Shenzhen amounted to 244.9 billion yuan, up 13.5 percent from the beginning of 2008.

Wang Zhaoxing, vice-chairman of the CBRC, encouraged the five State-owned commercial banks to develop business relationships with SMEs.

"While limiting the growth in the amount of credit, commercial banks have to make sure that the increase in loans given to SMEs isn't slower than the average growth of all loans," Wang told reporters in mid-March.

He asked the big five banks to adjust their credit structure and shift their focus from large corporations to SMEs.

The industry watchdog will also make adjustments to ensure the department overseeing the five State-owned lenders will also coordinate the financial services to the SMEs, he added.

Many banks, including foreign lenders, started to focus on SME services this year.

Shenzhen Ping An Bank, the banking arm of Chinese financial conglomerate Ping An Group, which mainly targets retailing customers and the SME market, introduced a package of products to facilitate financing SMEs shortly after its official launch last year.

Under Ping An's new plan, SMEs can get a loan credit of under 500,000 yuan without a mortgage or guarantee. It also promises to approve loans within 15 days.

"We have given great emphasis to increasing the percentage of loans to SMEs, to provide all-around financial services," Ye Wangchun, vice-president of Ping An, said in an interview late last year.

Shenzhen Development Bank , a mid-sized listed lender based in Shenzhen, said it would continue to strategically focus on retail lending, trade finance and SME markets.

Compared with large corporations, SMEs are more willing to develop a long-term relationship with the bank, and they are more grateful of its services since they have limited fundraising channels, SDB Chairman Frank Newman said in a press conference on the lender's annual results.

Standard Chartered Bank China announced plans this year to place an emphasis on business development for SMEs financial services and develop SMEs in the second-tier mainland cities.

HSBC China also kicked off its special services recently to help SMEs explore overseas markets by improving their financial efficiency and through tailor-made cross-border trade and financing resolutions.

Source: China Daily

Banking regulator aids SMEs

Smaller private companies may get easier access to credit even with the general background of tight monetary policy thanks to the efforts of the China Banking Regulatory Commission to help them in a time of rising costs and tightening credit.

The banking regulator recently urged commercial banks to take steps to help SMEs bridge financial difficulties by making maximum use of the increased quota for the development of small enterprises and make sure lending to those companies rises faster than overall loan growth.

"For the loans to small enterprises, interest rates should be at a level that limits risk but benefits the enterprises' sustainable development," Xinhua News Agency quoted Wang Zhaoxing, vice-chairman of CBRC, as saying.

The banks have also been urged to improve the network of outlets in the boomtowns that have dynamic private businesses and to diversify innovative funding channels for those enterprises.

Commercial banks have expanded credit in the second half of this year, prioritizing small firms, Wang said.

In early August, the People's Bank of China, China's central bank, decided to enhance the credit quota for 2008 by 5 percent for national banks and 10 percent for regional lenders in a bid to assist SMEs in their financing endeavors.

Many regional commercial banks have also taken measures to aid SMEs.

Before announcing the decision to lower the benchmark lending rate by 0.27 points to 7.20 percent last on September 15, China had raised interest rates five times this year and kept credit under strict control.

Together with the appreciation of the yuan and rising costs of labor and raw materials, tight monetary policies have contributed to the financial plight of SMEs, especially those heavily reliant on exports.

SMEs in China received only 300 billion yuan in credit in the January-March period, a fall of 30 billion yuan from a year ago and just 15 percent of the total 2.2 trillion yuan in credit extended in the three months, statistics from CBRC indicate.

As credit from commercial banks was rarely available, many SMEs had to adjust their production targets in the past few months, noted Liu Qingqing, associate professor of economics with South China Normal University.

"All in all, SMEs are weaker in their capability to weather tight monetary policies or economic turbulence," she noted.

Official statistics show that about 67,000 SMEs went bankrupt in the first half of this year and about 10 percent of the SMEs had industrial output grow by 30 percent from a year ago.

The growth rate was 15 percentage points lower than the comparable period in 2007.

Source: China Daily

40 b yuan restructuring package set

The Guangdong provincial government is set to announce a 40 billion yuan package to assist small and medium-sized enterprises in restructuring.

Wang Yang, Party secretary of Guangdong, made the remarks when meeting with more than a dozen Hong Kong media chiefs visiting the provincial capital Guangzhou in late July.

The government will encourage the SMEs to move their businesses to the less developed eastern, western and northern parts of Guangdong, he said.

In return, the enterprises agreeing to the relocation will receive electricity, water and transportation subsidies.

Guangdong is relatively strong in SMEs, but they face a range of difficulties, said Chinese Premier Wen Jiabao during a study tour to Guangdong in mid-July.

He urged greater support to SMEs in credit, taxation and industrial policies.

Growing prices of raw materials, higher costs of labor, tightening policies for the processing trade, lower tax rebates on exports and the appreciating Chinese currency all raise difficulties for smaller businesses in Guangdong, most of which are export-oriented.

In the first five months of this year, 35,000 enterprises canceled registration in Guangdong, representing a 35 percent increase from last year. About 40,000 new enterprises registered in Guangdong during the period.

Between 2006 to February this year 599 manufacturing firms have moved away from Shenzhen. Most were labor-intensive and resource-consuming firms in the electronics, machinery, garments and furniture industries.

In a conference held by Guangdong government in mid-July, challenges facing enterprises, especially SMEs, were cited as one of drags on economic growth in the first half of this year.

Wang said that operational difficulties are unavoidable during industrial restructuring for labor-intensive enterprises that lack innovation.

To deal with difficulties, he said Guangdong would use 40 billion yuan to help distressed SMEs relocate.

Hong Kong has been the source of about 70 percent of overseas investment into Guangdong in the three decades of China's reform and opening-up.

"Hong Kong-funded SMEs have a bright future in Guangdong," Wang noted to Hong Kong media chiefs.

Source: China Daily

Credit guarantees planned to back loans

Guangdong province plans to establish a 5 billion yuan industrial fund for advanced manufacturing operations.

The fund will be mainly used to finance small and medium-sized enterprises with innovative technologies, especially those involved in wind power and biomedicine.

The plan has been submitted to the National Development and Reform Commission for approval. The result is expected to be released by next month.

Once approved, the fund will help local SMEs, most of which are now privately financed, to better meet their needs for capital.

However, considering the mass of SMEs in the southern province, the number of beneficiaries will be relatively small.

Current difficulties facing exports have pushed many private companies to the verge of breakdown. Only a small number can get government financial aid, said Ding Li, director of Guangdong Academy of Social Sciences.

Foshan, less than 20 km south to the provincial capital Guangzhou, is a city with a host of private companies.

The city government now plans to launch a scheme in a bid to help them vie for the funds.

Under the plan, credit guarantee funds will be established in various districts of the city that provide an annual maximum credit line of 500 million yuan for small companies with outstanding performance and growth potential.

The approach calls for banks to provide loans ten times the sum of the credit guarantee fund. Loans will mostly be less than 15 million yuan for one year at the bench sub-prime interest rate released by the People's Bank of China.

The guarantee funds, cooperative guarantee institutes and banks will jointly build a mechanism to share risk information loan exposure. In the case of default, the three parties will share in the loss.

About 80 percent of the companies that will receive support from the fund are expected to be from Nanhai and Shunde districts of Foshan, areas rich in privately invested companies.

Funding SMEs with promising growth potential will help with financial difficulties and play an instrumental role in diversifying local industries, said Hong Jutao, vice-director of Nanhai district's development and reform commission.

By 2011, about 60 companies are expected to go public at home and abroad seeking to raise about 30 billion yuan.

Source: China Daily

CPC official heads for Ningxia for 50th founding anniversary

Communist Party of China senior official He Guoqiang on Monday left Beijing for Ningxia Hui Autonomous Region to mark the region's 50th anniversary.

He, member of the Standing Committee of the Political Bureau of the CPC Central Committee and secretary of the Central Commission for Discipline Inspection, led a delegation to the regional capital, Yinchuan.

Ningxia, covering about 66,000 square kilometers, was established on Oct. 25, 1958. It has a population of 6.1 million, of whom 2.17 million, or 35.57 percent, are of the Hui ethnic group.

Source: Xinhua

Central gov't investigates north China landslide

The State Council, China's Cabinet, has sent a team to investigate the landslide that buried dozens of people in the northern Shanxi Province, but was initially played down by local authorities.

The landslide toppled a waste dump of a local iron mine and buried Sigou Village in Loufan County in the suburbs of the provincial capital Taiyuan on Aug. 1.

Eleven dead bodies were found by Aug. 16, and the official death toll ended there. Families complained at least 34 others had been trapped under more than 800,000 cubic meters of rocks and waste from the mine.

The emergency rescue headquarters have since dug 122,000 cubic meters of waste to search for more victims, but to no avail.

The exact number of people trapped remains unknown because mostof them were migrants and were not registered at the local public security bureau, which means their disappearance might not be immediately reported.

The official website of the Loufan county government said Sigou village had 276 migrants as of November 2007, including 150 from the northwestern Gansu Province and 56 from the neighboring county of Jiaocheng.

They made about 100 yuan a day by collecting pieces of iron core from the waste dump and reselling them. The waste dump, within 200 meters from the village, belongs to Jianshan Iron Mine operated by Taiyuan Iron and Steel Company Ltd.

Such dumps should be at least 500 meters from residential areas and should have embankments or walls to contain dust or prevent landslides, according to Chinese law. The dump near Sigou, however, had none.

The Loufan county government's plan to relocate Sigou Village was dropped early this year because the villagers and the mine authorities could not agree on the compensation scheme and the planned new village did not have enough arable land to sustain the farmers.

Loufan county is about 97 kilometers from Taiyuan's city center.

Source: Xinhua

Typhoon Hagupit nears China's southern coast

Hagupit, the 14th typhoon to affect China this year, is poised for landfall in the southern Guangdong Province early on Wednesday, meteorological stations in Fujian and Guangdong provinces warned on Monday.

The eye of the storm was located 480 km southeast of Hengchun City in Taiwan at 5 a.m. Monday, packing up winds of hurricane force at 137 kilometers per hour in the center, said the observatory in Fujian.

It forecast the typhoon moving at 20 to 25 km per hour would begin to affect coastal cities of Xiamen, Zhangzhou and Quanzhou with strong winds and heavy rains from Tuesday. However, the typhoon's possible landing path would be in the neighboring province of Guangdong.

The meteorological station in Guangdong forecast that Hagupit would make a landfall on Wednesday morning, before which the province would be dominated by a heat wave with daily high temperatures of 35 to 37 degrees Celsius.

It said the typhoon would bring heavy rains to central and southern parts of the province.

The weather stations warned that Hagupit could move further inland in Guangdong, causing geological hazards and heavy agricultural losses.

Hagupit would be the second typhoon in a week to affect Taiwan, Fujian and Guangdong, after typhoon Sinlaku lashed the region last Tuesday.

Source: Xinhua

Staff stand with Sanlu despite fears for future

The crowds in the courtyard of Sanlu Group headquarters have gradually dispersed in 10 days since the melamine contamination scandal broke, but people are still coming in to return their purchases of milk powder.

The company has set up booths to collect returns from customers. In front of the two cash counters, queues of people, waiting to get their money back, extended about five meters.

Since Sept. 12, Sanlu has recalled all baby formula products found to contain melamine, a chemical that caused kidney stones in infants.

"My brother returned several bags of milk powder two days ago and was compensated for the purchase in full," said Mei Xiao, a Shijiazhuang resident in her twenties. "I came to return bagged milk, but they said they were still examining bagged milk and the result has yet to come out."

A company employee asked Mei to write down her address, contactdetails and the serial numbers of the bagged milk. "We will inform you how to return them if this batch of goods contain banned substances," he said.

On the other side of the courtyard, workers unloaded boxes of milk powder from trucks, company employees counted them and an accountant led people to the office building to receive their reimbursement.

Gong was sitting in the shade of a tree shadow and waiting. She, with other wholesalers of Sanlu from neighboring Henan Province, came with two trucks loaded with about 1,000 boxes of baby formula.

"I hope Sanlu can repay the wholesale price," said Gong in her thirties, reluctant to give her full name. "Even if they do, I will still suffer losses of about 30 percent due to the transport and storage costs."

Wholesalers are flooding into the headquarters, with consignments of up to 4,000 boxes of powdered milk. "Sanlu owed me about 1 million yuan ," said a wholesaler surnamed Guo, also from Henan. She had recalled the formula from her retailers and returned it to Sanlu.

"I have been here five days and I'm still waiting for Sanlu to give me a solution," she said, sitting on the stairs at the entrance of an office building.

The rest part of the headquarters were quiet though some of the staff were seen working in their offices.

All Sanlu plants have been ordered to stop production. A joint investigation team from the central government headed by the Ministry of Health is working in the company.

Tian Wenhua, sacked as board chairwoman and general manager of Sanlu on Sept. 16, was arrested and charged with producing toxic food a day later. Under Chinese law, she could face death penalty or life imprisonment if found guilty.

The new board chairman and general manager Zhang Zhenling was elected on Sept. 18. He has apologized to the public on behalf of the company and promised to deal with the incident properly.

But employees at the lowest level like Tian, a lady in her mid-thirties, were worried about their uncertain futures.

"I have no idea what will happen," she said. She had worked for Sanlu for 12 years and it was her first job. "What if the company shuts down and I lose this job? I am not young and it will be hard to find a new one. I have aged parents to support and a son in primary school."

But most employees have stood with the company. Tian stayed at the headquarters from morning to evening everyday including weekends, helping set up booths, hand out notices and answer questions from customers. "What I can do now is to do my own job," she said.

Talking about criticism from the public, her eyes watered, "I have been here so long that I feel part of this company. It was very sad to hear these words. I felt as if I was a bad person. But I am as ordinary as those who come to return powdered milk. My son drank it as well when he was young."

The neighborhood near the Sanlu headquarters is home to many of its employees and retired workers. Chen Xiuqiao, who retired from Sanlu seven years ago, has lived here for decades.

"I worked in Sanlu for about 30 years. The company developed well in the past few years. My pension increased," Chen said. "I never expected such an event. How could a firm with a history of 50 years come to this?"

The largest diary producer in Hebei has about 10,000 employees. The younger ones were less emotional, but also anxious about the future of their employer and themselves.

"What everyone here can do is wait. If it is a bad news, I hope a solution for workers comes as quickly as possible so that we have time to prepare for it," said a young woman working at the quality control lab, who refused to be named. "But I still hope the company can pull through this crisis. I like this job. I am willing to go on working for Sanlu."

Source: Xinhua

CPC official arrives in Ningxia for 50th founding anniversary

Communist Party of China senior official He Guoqiang arrived here Monday morning to mark the 50th anniversary of the Ningxia Hui Autonomous Region.

He, member of the Standing Committee of the Political Bureau of the CPC Central Committee and secretary of the Central Commission for Discipline Inspection, arrived at the Hedong Airport of Yinchuan, the regional capital, at about 11 a.m.

He and the delegation he headed received warm welcome from the local officials and people.

Ningxia, covering about 66,000 square kilometers, was established on Oct. 25, 1958. It has a population of 6.1 million, of whom 2.17 million, or 35.57 percent, are of the Hui ethnic group.

Source: Xinhua

94 tons of renewable resources from trash from Olympic venues

According to the Beijing Evening Newspaper, the material recovery company of Haidian District in Beijing has reclaimed 94 tons renewable resources from trash from 11 Olympic and Paralympic stadiums.

Under the detailed working plan and safeguard mechanism, workers at Hanjiachuan renewable resources separation center complete an excellent job of reclamation. They reclaimed 94 tons of renewable resources including paper, bottles, plastics from 11 Olympic and Paralympic stadiums' trash and sent them to factories for reuse.

By People's Daily Online

80% of IP resources used up in China

China's IP resources can only sustain 830 days at current distribution rate, and new internet users could have difficulty visiting the internet if no measures were adopted, sources from the seminar of IP resources of 2008 held by China Internet Network Information Center revealed.

Li Kai, the director of IP team of CNNIC's international department, explained that every Internet user needs an IP to visit the internet, and most of China's Internet users are using IPs from IPv4. But 80% of resources from IPv4 are used up.

Recently, China's IP application has surpassed Japan and taken the No.2 position of the world. If no new resources for IP address are available by 2010, new internet users might not visit the internet.

He also introduced that the United States has developed the IPv6 network address, which features unlimited resources, but only edu.cn in China use this kind of IP. Using IPv6 means internet operators have to invest large mount of money to buy new equipment and discard the old ones. "We held seminars almost everywhere just want to tell operators to apply for the left IP addresses as soon as possible and also to prepare the new IP addresses from IPv6 for Internet users," Li added.

By People's Daily Online

Expert says China enters the period of wage rising

China has entered the period of wage rising. In the future, wages will continue to rise. This is what Li Yang, Director of Institute of Finance and Banking, Chinese Academy of Social Sciences said on "China's macro-financial risks in the global adjustment of interests" forum on September 2.

Li pointed out that China's current prices rise is a structural rise. Judging from the structure of savings and investment, China's savings rate is very high; the total market demand is greater than supply, so there is no inflationary pressure on the whole. Although during a period of time in some regions there will be structural imbalance, leading to structural inflation, there is no long-term inflation trend.

Li also said factors that lead to current structural price increases include rising wage costs and resource price reform. He said that China has entered a period of wage rising, which for enterprises, the rising wage costs in the next few years is inevitable. However, he said that although it would have long-term pressure on price, but there are still surplus labors at present, so the impact of the rising wage costs on prices would be moderate.

By People's Daily Online

Rescue operation continues in NE China coal pit with fatal fire

Rescuers failed to find the bodies of 12 miners missing after a fire in a coal mine in northeast China's Heilongjiang Province on Saturday.

A fire broke out at about 3:30 a.m. on Saturday at Fuhua Coal Mine in Hegang, a city in eastern Heilongjiang Province, while 43 miners were underground. Twelve managed to escape, but 31 were trapped.

Rescuers had found the bodies of 19 of the miners as of 10 a.m. on Monday. Five of the corpses were brought to the surface late on Saturday, according to the rescue headquarters.

Experts at the site said the 12 trapped miners had little chance of survival as they had been trapped for more than 30 hours, despite continuous work to control the fire, including injecting liquefied carbon dioxide into the mine.

Rescuers had been forced back by the fire and the increasing toxic gas, including carbon monoxide.

The mine's owner, manager, a vice manager in charge of production and another in charge of ventilation, and an engineer were in police custody. Their bank accounts had been frozen, Wang Rui, vice mayor of Hegang, said.

The licensed mine, in Xingshan District of Hegang, belongs to Fuhua Mining Co., Ltd., and has an annual production capacity of 60,000 tons.

The city has ordered all its coal mines to suspend operation pending inspections. Mine safety authorities are investigating the cause of the blaze.

Source: Xinhua

Four Hong Kong students identified among 43 dead in S China club fire

Four students from a Hong Kong technical school were among the 43 people who died in a nightclub fire in the neighboring Shenzhen City on Saturday, the city government said on Monday.

Choi Wai-tat was celebrating his 18th birthday with four friends at the "King of Dances" nightclub in Longgang district of Shenzhen when the place was engulfed by fire at around 10:49 p.m. Saturday.

More than 300 people were watching a performance, during which fireworks ignited flammable material on the ceiling, which spread the fire across the 150-square-meter hall.

Choi and three friends died in the accident. The only one of the five to survive was Cheng Sze-lap, around 20 years old. Cheng told Xinhua from his hospital bed in Shenzhen he was "extremely sad" at his friends' deaths.

Doctor Guan Kui with the Central Hospital in Longgang District said Cheng had suffered smoke inhalation injury and had been in a coma for more than two hours. "He has basically recovered and is about to leave hospital today."

In addition to the students, another Hong Kong resident was killed in the fire. However his identity has yet to be confirmed, said a spokesman with the Shenzhen municipal government.

The fire and the subsequent stampede while people tried to escape via a narrow 10-meter-long passageway killed 43 people and injured 88. Four of the injured were in critical conditions.

Source: Xinhua

China orders new safety checks of cultural venues after deadly club fire

China's cultural ministry on Monday ordered a national overhaul of the safety of cultural and performance facilities, following a nightclub fire over the weekend that left at least 43 dead.

The ministry issued a circular urging an immediate, thorough check of all performance venues and profit-oriented performances, internet cafes and galleries, directing its local offices to uncover all hidden problems and safety loopholes.

Unlicensed cultural facilities must be registered and closed inline with the law, it said.

It told its local offices to blacklist problematic facilities and coordinate with work safety departments to follow up until the problems were resolved.

Training programs should also be organized to enhance business operators' safety awareness, it said.

The fire, which left 43 people dead and 88 injured, broke out Saturday night at the "King of the Dancers" club in south China's Shenzhen city, when more than 300 people were watching a performance in a hall.

An initial investigation by the police showed that fireworks set off during the performance ignited the flammable material in the ceiling. The fire then spread quickly across 150 square meters.

The club had been operating without a business license, according to the preliminary investigation.

Source: Xinhua

Chinese, U.S. presidents talk over phone about ties, U.S. financial turmoil

Chinese President Hu Jintao and his U.S. counterpart George W. Bush discussed bilateral relations and the financial upheavals in the United States in a phone conversation on Monday morning Beijing time.

Bush congratulated Hu on China's successful hosting of the Beijing Olympic and Paralympic Games and thanked China for its hospitality toward him when he was in Beijing to attend the Olympics. Hu appreciated the U.S. government and people's support for the Games.

Bush briefed Hu on the latest development of the U.S. financial market, saying his government was well aware of the scope of the problem, and had taken and would continue to take necessary measures to stabilize the domestic and world financial markets.

Hu hoped the measures would soon take effect and lead to a gradual recovery of the financial market, which he said not only serves the interests of the United States, but also those of China, and benefits the stability of the world financial market and the sound development of the world economy.

The Chinese president also praised the good momentum of the development of the Sino-U.S. ties in recent years in various areas.

He said China is ready to work with the U.S. side to intensify dialogue, exchanges and cooperation, and properly handle issues concerning mutual interests and of major concern, particularly the Taiwan question, in a bid to push forward the sustained and steady development of the Sino-U.S. constructive and cooperative ties.

Source: Xinhua

Senior Chinese official urges students help promote China-U.S. ties

Senior Chinese official Chen Zhili on Sunday urged students from the quake-rattled Sichuan Province to help promote the friendly ties between China and the United States.

Chen, vice-chairwoman of the Standing Committee of China's National People's Congress, the top legislative body, made the remarks while meeting with 25 of 150 students who are studying in the State University of New York under a special program.

In May, the Wenchuan earthquake struck the area around Chengdu in China's Sichuan Province, causing grave loss of life, injuries and infrastructure damage, and severely affecting the lives of hundreds of thousands of people.

As a friendly gesture, SUNY and New York Governor David Paterson welcomed 150 university students from Sichuan Province to study at 22 campuses of the University at no charge for the coming academic year.

Noting that the project is a symbol of friendship between the peoples of China and the United States, Chen said the Chinese leaders pay great attention to it and the Chinese people care very much about the school life of the students.

To live up to the expectations of both the Chinese and American peoples, Chen called upon all the students to work hard to acquire as much knowledge as possible, so as to better serve their motherland and repay the international community for its love and help after they finish their college study both in New York and in Sichuan as well.

At the invitation of U.S. First Lady Laura Bush, Chen will attend the White House Conference on Global Literacy scheduled to open Monday in New York.

Source: Xinhua

China defense minister vows more cooperation with British military

Defense Minister Liang Guanglie said on Monday that China is ready to further strengthen exchanges and cooperation with Britain to raise military-to-military ties.

"The Chinese side is ready to further enhance exchanges and cooperation with the British side at various levels and in extensive areas to continuously promote military-to-military relations for new progress," Liang told visiting Chief of the Naval Staff of Britain Jonathon Band.

Liang, who is also state councilor, hailed the steady development of relations between the two armed forces in recent years, citing increased technological exchanges and personnel training.

He said current state-to-state relations between China and Britain have good development momentum, which is in the real long-term interests of both countries.

He hoped the two sides would keep on promoting the healthy and steady development of the bilateral comprehensive strategic partnership.

Band said the British side firmly believes that it is important for both sides to maintain good political and military ties.

He said he hoped to gain a deeper understanding of China through his visit and to seek more fields of cooperation that will benefit both sides.

Source: Xinhua

Chinese police arrest suspect in fatal landslide

A foreman and No. 2 suspect behind a fatal landslide in the northern Shanxi Province was arrested in the neighboring Shaanxi Province on Sunday, the local authority said on Monday.

Zheng Jiabao, 46, a foreman of the unlicensed Tashan Mine who left the collapsed iron ore retaining pond area with his wife after the accident, was caught in a hotel in his hometown Shanyang County, at 7 a.m. on Sunday, a county public security official said.

Zhang Peiliang, the owner of the mine, had been arrested.

The unlicensed iron ore dregs retaining pond in Xiangfen City burst on Sept. 8, discharging a huge torrent of tailings, mud and rock that devastated a downstream village, an office building and a busy outdoor market.

The death toll from the accident has risen to 265 with several still listed as missing by 5 p.m. on Sunday.

An initial investigation found the collapse was due to negligence. The tailings dumping pond was built in violation of regulations and had few safety inspections.

Source: Xinhua

Death toll from China's May earthquake remains as 69,227

The death toll from the May 12 earthquake in Sichuan Province and its neighboring region remained unchanged as 69,227 as of Monday afternoon, the State Council Information Office said in a statement.

The numbers of people listed as missing and injured were 17,923and 374,643 respectively.

As of Monday afternoon, a total of 1,486,407 quake-affected people had been relocated.

Among 96,544 persons who were hospitalized for injury, 93,518 had been discharged, the statement said.

The government spending on disaster relief and reconstruction had topped 76.806 billion yuan ,including 69.337 billion yuan from the central budget and 7.469 billion yuan from the local budget.

According to the Ministry of Civil Affairs, domestic and foreign donations had reached 59.461 billion yuan in cash and goods by Monday noon. Of this, 26.88 billion yuan had been forwarded to quake-hit areas.

About 1.58 million tents, 4.87 million quilts, 14.1 million garments, 4.09 million tonnes of fuel and 8.75 million tonnes of coal had been sent to the quake-hit areas, it said.

Relief workers have built 677,131 temporary houses for relocated people.

In the 96 hours ending Monday noon, one strong aftershock and 589 aftershocks at or below magnitude 3.9 were monitored in the quake zone, according to the China Earthquake Administration.

A total of 30,825 aftershocks had been detected since May 12.

A total of 476,172 tonnes of grain and 12,102 tonnes of cooking oil have been allocated to the quake zones from central reserves as of Sunday, the statement said.

Of the 53,295 km of roads damaged in the quake, 53,018 km had been restored, according to the statement.

And 128,154 of the 138,960 business outlets damaged by the quake had been reopened, the statement read.

As of Monday noon, 210,725 quake-affected people had been organized to work outside of the quake zone, while another 846,245people had found jobs in their hometowns.

Source: Xinhua

Olympic volunteers well-received at Beijing job fair, newspaper says

Job hunters with Olympic experience got a positive reception at a large-scale job fair here, Monday's China Youth Daily reported.

The fair on Sunday, the first after the Games, drew as many as 30,000 applicants.

More than 5,000 positions were offered by about 600 companies, including many big names such as China Life Insurance Company, Lenovo and Yum! Brands Inc.

Although not stated as a requirement, applicants with Olympic service experience were preferred by employers, the newspaper said.

An employee from Yum! who declined to be identified said that Olympic volunteers had a better sense of service, which companies needed.

China's Hainan Airlines Co. Ltd and Grand China Air Co. Ltd will recruit 300 Olympic volunteers as stewards and 50 as managers, said Zhu Yimin, President of Hainan Airlines and Grand China Air last week.

He said Hainan Airlines and Grand China Air will introduce an "Olympic air crew" on selected routes, carrying forward the "Olympic spirit and offering service of high quality to customers".

Source: Xinhua

China eyes closer military exchanges with Pakistan

Senior Chinese military official Guo Boxiong pledged on Monday to further strengthen military exchanges between China and Pakistan.

In his meeting with Pakistani Chief of Army Staff Ashfaq PervezKiyani, Guo, vice chairman of the Central Military Commission, appreciated the fruitful cooperation between both sides over the years.

Noting the two countries as good neighbors, good friends and good partners, Guo said both sides had carried out remarkable cooperation in politics, economics, military, culture and technology, and made positive contribution to regional and world peace, stability and development.

China highly values its all-round strategic cooperative partnership with Pakistan, Guo said, vowing to join hands with the country to boost bilateral ties to a new level.

In response, Kiyani said his country treasures its traditional friendship with China and is ready to further boost cooperation with China.

Source: Xinhua

Chinese army reforms petty officer training

The Headquarters of the Chinese People's Liberation Army plans to beef-up education and training of non-commissioned officers in the country.

That's according to a document, titled "Some Ideas on Further Developing the Group of Non-commissioned Officers".

The decree was issued to all units of the PLA and the Chinese People's Armed Police Forces . It has been approved by Hu Jintao, chairman of the Central Military Commission, who is also general secretary of the Communist Party of China Central Committee and state president.

China had been trying to reform how non-commissioned officers were trained. According to press release issued Monday, non-commissioned officers will now be selected in a democratic way.

An independent educational system will be set up for training non-commissioned officers while preferential policies will be adopted for petty officers regarding their marital affairs, social security, and housing.

Source: Xinhua

China to ease control over share repurchase to boost stock market

China's securities watchdog said Sunday it would make it easier for listed companies to buy back their stocks in the latest government move to boost the equity market.

Share repurchase through bidding at stock exchanges would no longer need approval from the China Securities Regulatory Commission , according to a draft regulation issued by the CSRC.

It stated that such acts could take place after a report to the CSRC and a public disclosure of the information.

The change was made to improve the mechanism of share repurchase, which could help maintain investor confidence and stabilize the stock market when equities were undervalued, said the CSRC.

Chinese equities soared 9.46 percent on Friday to close at 2,075.09 points, ending a three-day decline amid Wall Street upheaval.

The rally came after the government canceled the 0.1-percent stamp tax on stock purchases and let its investment arm purchase shares of three major Chinese lenders on the secondary market.

Despite the Friday gains, China's key index was still only at about a third of where it stood at its peak in October 2007.

The CSRC will solicit public opinions on the draft regulation till Sept. 28.

Source:Xinhua

ECOWAS delegation due in China for talks on investment

A delegation of West Africa's public and private sector operators are due in Beijing next week for a joint forum with their Chinese counterparts in an effort to stimulate increased Chinese investment in the strategic sectors of the regional economy.

According to the African Press Organization on Sunday, approximately 450 private and public sector operators are participating in the forum of which some 350 are from the private sectors of the 15 ECOWAS Member States.

The talks is a follow-up to last year's successful China-Africa Summit.

The four-day inaugural ECOWAS China Economic and Trade Forum, which will open on Sept. 23 will elevate the existing bilateral relations between China and ECOWAS Member States to a strategic partnership by exploring and concretizing agreements for Chinese investment in critical sectors.

Emphasis will be mostly being on investments in the development of infrastructure, exploitation of natural resources, agriculture, banking and other services, the report said.

Source:Xinhua

Chinese stocks continue to perform strongly on gov't market boosts

China's stock markets Monday maintained the momentum it gained last Friday on major government market boosts.

The benchmark Shanghai Composite Index, which covers A and B shares, opened up 166.63 points, or 8.03 percent, at 2,241.72, and then corrected a bit to conclude the morning session at 2,207.48, up 132.39 points, or 6.38 percent. The smaller Shenzhen Component Index ended at 7,415.14, up 261.14 points, or 3.65 percent.

The combined transaction volume on the two bourses amounted to 116.503 billion yuan for the Monday morning session, compared with the 65.6 billion yuan for the whole Friday.

Observers said this showed market sentiment continued to recover.

They attributed the strong market performance to new stimulus measures the securities regulator ushered in over the weekend to stabilize the stock markets, and to Premier Wen Jiabao's pledge on Saturday to maintain the stability of the stock markets and the financial regime at large.

Bank shares, including the Industrial and Commercial Bank of China, Bank of China, China Merchants Bank, China Construction Bank and CITIC Bank, rose to the 10-percent daily limit several minutes after the opening.

Last Thursday, the government's investment arm -- Central Huijin Investment Co., Ltd. -- said it would buy shares of three major Chinese lenders on the secondary market to fortify their share prices.

The three lenders, the Industrial and Commercial Bank of China, the Bank of China and the China Construction Bank, had shed heavy losses in the previous three days of trading, as banks were hit most by the spreading crisis on the Wall Street.

On Monday morning, most losses were in the steel sector, as many believed continuous price plunges for steel products at domestic market would drive down the industry.

Pangang Steel &Vanadium declined 5.24 percent to 8.32 yuan, and Great wall Holding went down 4.95 percent to 5.76 yuan.

Gains outnumbered losses by 829 to 47 in Shanghai and by 668 to62 in Shenzhen.

Source:Xinhua

Pyongyang autumn international trade fair opens

The fourth Pyongyang Autumn International Trade Fair opened here at the Three Revolution Exhibition of Pyongyang on Monday.

More than 150 companies from 15 countries and regions took part in the four-day fair, which is scheduled to close on Thursday.

Over 70 Chinese companies, mainly from China's northeastern Liaoning province, attended the event.

Items on sale range from electronic products, machines, medicines to costumes.

"We will further expand and strengthen every kind of economic cooperation and exchange under the principle of equality, mutual respect and mutual benefit," said Ri Myong San, vice minister of foreign trade of the Democratic People's Republic of Korea .

The Pyongyang Autumn International Trade Fair, which was first held in 2005, is an annual event like its spring version, the Pyongyang Spring International Trade Fair.

Source:Xinhua

Danone suspected of violation of Chinese laws

Danone has paid up to 570 million yuan in its one-and-a-half-year-long legal dispute with Wahaha, and its high-profile legal actions worldwide have been questioned by shareholders.

KPMG involved into Danone-Wahaha feud

According to sources close to the case, KPMG, one of "big four" accounting firms, has violated China’s judicial sovereignty by assisting Danone Asia Pte Ltd and its subsidiaries in its forcible takeover of the foreign shareholder of non-joint ventures of Wahaha and sending BVI and Samoa court orders to the non-joint ventures and banks operating in China. Any foreign institution or individual is not allowed to deliver documents and conduct investigations in China without permission from relevant Chinese oversight authorities, in accordance with applicable Chinese laws. For this reason, Suqian, Jiangsu province-based Wahaha Hengfeng Food Co., Ltd, one of the non-joint ventures, brought an accusation against KPMG at Suqian Intermediate People's Court, asking for compensation from KPMG. The court has accepted the case and released a notification on responding to the lawsuit. The court heard the case on August 12.

In November 2007, Danone and KPMG jointly brought the foreign shareholder of non-joint ventures of Wahaha and relevant directors into court at British Virgin Islands, applying for appointment of KPMG as the receiver. One month later, Danone proceeded against the parent of the BVI company in Samoa, again applying for appointment of KPMG as the receiver. Danone alleged that the non-joint ventures impaired its interests, while Wahaha claimed the ventures have nothing to do with Danone.

Though British Virgin Islands is the most popular offshore jurisdiction in the world, it has only one judge. Samoa in Oceania is listed by the UN as one of the most undeveloped countries and does not have a judge of its nationality. Danone cheated the BVI court when applying for arbitration in the event that the BVI company was absent, according to a source at the BVI company.

Wahaha Hengfeng Food sent a petition to the court, accusing KPMG of violating Chinese laws and affecting its normal production and operation, for which the company asked for compensation and a public apology from the accounting firm. A spokesperson for Wahaha Hengfeng Food confirmed the news and said that the company has received a court summons.

Huge sum of legal costs for Danone

According to its first-half results this year announced on July 25 by Danone, the company paid up to 57 million euros in legal disputes. The huge sum of legal costs is related to Danone China’s global legal actions against Wahaha, analyzed industry insiders.

Danone had previously brought accusations against Wahaha at some ten judicial institutions in and out of China, of which all ended in favor of Wahaha. As a result, all the legal costs were assumed by Danone. According to an internal source, as all the lawyer teams and accounting firms serving the company are global leading teams, all of their large sum of attorney fees were paid by Danone in advance. In addition, the tax inspection authority in Shanghai has accepted the case concerning Danone China executives’ tax evasion issue. Should the case be proved, Danone will again suffer a sizeable fine.

Referring to its large sum of legal fares, Riboud, President of Danone, said he had noticed the issue. However, in light of the expensive legal costs arising from its legal actions worldwide, shareholders will naturally come at the question, where should Danone go?

Danone suspected of deceiving the court

“According to BVI and Samoa laws, a company shall not be ordered to be taken over unless its property is facing real threats and it is suspected of non-normal operation and management. However, in fact, Danone still exists as an investment company and the non-joint ventures of Wahaha with investments by Danone also have been operating normally. After describing Wahaha owner Zong Qinghou using the words such as 'conspiracy center' at the court, Danone won the trust of the court deceivably by exaggerating and hiding the facts. Obviously, Danone deceived the judge,” a source familiar with the situation told the reporter.

The reporter then called experts in the legal community for consultation on the matter. They said according to the current situations, KPMG fails to comply with China’s applicable laws for taking on the position of the receiver under the commission of Danone. In addition, KPMG has been suspected of violation of Chinese judicial sovereignty by bypassing Chinese judicial authorities to directly implement BVI and Samoa court orders, and sending the orders to Chinese banks to require them to freeze assets of the non-joint ventures’ foreign shareholder in China. As a result, KPMG is very likely to lose the case.

“In accordance with applicable Chinese laws, KPMG is unqualified for the position of a receiver as an intermediary but the company forcibly took over the foreign shareholder of non-joint ventures of Wahaha without the permission from China’s judicial authorities. One the whole, KPMG has severely infringed upon the judicial sovereignty of China,” a lawyer said when answering the question from the reporter.

Danone is not only suspected of violating China’ judicial sovereignty seriously but also faced with lawsuits again due to its tricks with China’s courts and the compulsive takeover of Wahaha by KPMG at the instigation of Danone. Troubles came one after another to Danone in recent days, including suspicion concerning violations of the Chinese judicial sovereignty, charges of massive tax evasions by its executives and the bad news about its poor operations in the country. In addition, to date, its large-scale “lawsuit show” around the world has suffered successive defeats. After one and a half years of war of words, the company’s goodwill in China has clearly become not so good. According to a poll conducted by a portal website, 90 percent of Chinese netizens opposite Danone’s acquisition of Wahaha with a clear stand, while a large number of Chinese consumers also said they would consider boycotting Danone’s products, marking a critical situation facing Danone.

From another point of view, Danone has also been questioned by shareholders as the company’s abuse of laws worldwide directly led to drops in its earnings and damages in its shareholders’ interests. Since it is faced with more and more troubles, the company is expected to have a difficult future.

Danone trapped in appeal case amid tax dodging scandals

Danone Group has been hit by a series of scandals since it started operation in China 20 years ago, from previous acquisition and tax dodging to the current controversial appeal case. We can gain a clear understanding of Danone’s strategy in China through these scandals. Looking at Danone’s tactics, we find that whatever the company does is for its own benefits and interests. To maximize its interests, it could ignore common value and human caring. Putting aside Danone’s dispute with Hangzhou Wahaha Group, let’s review its response to the Evian issue. The Paris-based company insisted on that Evian-branded mineral water is harmless to human being even after Chinese authorities found excessive bacteria in imported Evian water. Now, please turn your attention to the unreasonable requirements of Danone China executives including Chairman Qin Peng on Wahaha. In their best interests, they initially wanted to acquire non-joint ventures of Wahaha at a very low price and bought over Wahaha Chairman Zong Qinghou in secret, in a move to impair the interests of Wahaha employees in the dark. They took into consideration only their own benefits and interests and the motivation was the key point in the feud between Danone and Zong. Zong’s fight was a reflection of Wahaha as a whole’s fight as well as an outstanding brand’s fight against pursuit of private interests.

If we view Danone’s acquisition as a commercial strategy, then tax dodging and appeal scandals are a result of Danone executives’ extreme pursuit of their own benefits and interests. Tax evasion from Danone executives is a significant challenge to China’s tax laws. During the early stage of the Danone-Wahaha cooperation, Qin Peng said publicly that his salaries were paid by Danone from outside China mainland, as individual income tax rate is lower in overseas markets such as Hong Kong than in mainland. Danone was involved in malicious collusions with Robust’s President, He Boquan, and tax evasion during its acquisition of the leading Chinese soft drinks maker. The appeal issue is the latest of a series of Danone’s scandals.

Danone has used all possible means to take control over China’s domestic enterprise Wahaha, including the launching of personal attacks against Zong by its PR agency, Ogilvy Public Relations,
knowing that Zong is the soul of the Wahaha trademark. Acquiring the trademark without cooperation from Zong will be useless. In addition, Danone hoped to continue to benefit from Wahaha, while keeping Zong under control. After failure in attacking Zong and his families, Emmanuel Faber, Executive Vice President of Asia-Pacific of Danone, said the company would get Zong behind bars for the rest of his life. Danone later lodged eight international arbitration applications with the Arbitration Institute of the Stockholm Chamber of Commerce , while Wahaha lodged an arbitration application with Hangzhou Arbitration Commission for the transfer agreement concerning the trademark.

Danone lost the lawsuits. In December 2007, Hangzhou Arbitration Commission ruled in favor of Wahaha in its trademark dispute with Danone. The French group appealed to the Hangzhou Intermediate People's Court in June 2008, asking for reversing the ruling against it. However, its appeal was rejected, meaning the ruling in favor of Wahaha is valid and the Wahaha trademark is owned by Hangzhou Wahaha Group. Danone decided to appeal to a higher court. However, in such a case, no further appeal is allowed in accordance with Chinese laws.

A just cause enjoys abundant support while an unjust cause finds little support. Danone seems on the verge of a cliff. The company does not have a leg to stand on, despite its series of appeals. Unreasonable terms in the transfer agreement bring huge risks to Danone, whose own behaviors are doubtful. Shocking secrets will be uncovered, if someone keeps a close eye on personal problems of Qin Peng and Emmanuel Faber. If we say that Danone’s unsuccessful joint venture with Robust was a thing of the past, then Danone’s performance in recent years are being questioned. Furthermore, losing control over those hard-working Chinese entrepreneurs will lead to failure for the multinational company, which is good at mergers and acquisitions rather than brand management. Danone is doomed to failure in the Chinese market, just like Napoleon’s defeat at Waterloo.

China shares surge 7.8% on easier buy-back rules, U.S. rescue plan

Chinese share price jumped for a second day on Monday as investor confidence got further boosted by news including the U.S. massive rescue plan and easing rules on shares buy-back.

The benchmark Shanghai Composite Index finished up 161.32 points, or 7.77 percent, at 2,236.41, extending the 9.45 percent gain on Friday.

The Shenzhen Component Index gained 315.07 points, or 4.40 percent, to 7,469.07.

The U.S. Treasury over the weekend proposed buying up 700 billion U.S. dollars of mortgage-related securities amid the latest efforts to stem the financial crisis.

Source: Xinhua