Bill Zhang

Google Goes on Asian Phones

2006-05-19T06:12:00.000+02:00

Google signed a deal Thursday with the Japanese phone company KDDI to put its search engine into KDDI’s EZ Web Internet service for its “au” mobile phones.

The search king is also in talks with China Mobile about introducing a similar service in China.

Google has been expanding its presence in the Asian market, introducing a Chinese version of its search engine, Google.cn, and buying a stake in Baidu.com.

The Mountain View, California-based company also faces competition in Asia from its rival Yahoo, which already enjoys a strong presence in Japan, as well as having many users in China. Both companies have run into controversy from their dealings with the Chinese government, however.

The KDDI service will be available in July. It will combine search results for content aimed at both mobile phones and PCs. KDDI said it will also provide users with more direct access to information.

For example, when users search for information about an artist, KDDI used to turn up links to content in different categories and then users would have to perform further searches to turn up the information they were seeking.

Now with the Google engine, the search will give users direct access to music, applications, books, magazines, and shopping information that’s relevant to the artist.

Shares of Google rose $4.51 to $379.01 in recent trading.

Google and KDDI could not be immediately reached for comment.

Tokyo-based KDDI also plans to take advantage of Google’s vaunted advertising skills. Text ads based on search terms will appear alongside related search results. The two companies also plan to refine the mobile search features going forward.

In September, Yahoo was reported to have begun testing the display of ads with Internet search results on cell phones in Japan. That may have helped encourage Google to make a deal with KDDI.

“To lead in wireless today, you must lead in Japan,” said Gerhard Fasol, chief executive of the consulting Eurotechnology Japan. “Google is nowhere yet in wireless in Japan. KDDI is the top wireless company globally, so Google has a lot to learn from KDDI. But KDDI also has a lot to learn from Google, so if the chemistry works out, it looks like an ideal partnership.”

He noted that the KDDI-Google partnership leaves KDDI rival NTT DoCoMo isolated.

“Yahoo is fixed up with Softbank, and there aren’t that many search companies left after that for DoCoMo to partner up with,” said Mr. Fasol. “The only one I know after that is FAST, and they are quite active in Japan.”

China Mobile also said Thursday it is in talks with Google to provide its search engine on mobile phones in China. Chairman and CEO Wang Jianzhou of China Mobile (Hong Kong) told the Associated Press he has met twice with Google CEO Eric Schmidt.

“We both share the same idea: how to turn cell phones into a new kind of Internet search engine,” he said.

Google Maps Europe

2006-04-28T09:15:00.000+02:00

The search engine introduces a test version of its map product in four Eurozone countries.

Every war plan begins with the unfurling of a map. Google’s designs on Europe are a little clearer now that the search engine has released test versions of Google Maps for France, Germany, Italy, and Spain.

The map products of Google and its rivals, Yahoo and Microsoft, are an important part of the burgeoning local search business, which the search engines regard as one of the last untapped reservoirs of ad revenue.

The Kelsey Group predicts that the U.S. local advertising market will hit $124.8 billion in 2010. In 2005, it grossed $96.8 billion. U.S. local search and classifieds revenue is seen jumping 25 percent to $9.9 billion in 2010 from $3.3 billion in 2005.

Matt Booth, an analyst with the Kelsey Group, says that maps are the shock troops in a campaign to win advertising dollars from the local market.

“Mapping is the forefront of a local strategy,” he said.

‘The real revenue opportunity comes when there is rich content underneath all of the pins on the map.’

Google’s improving of its map product in Europe, announced late Wednesday, follows Yahoo’s debut of satellite images on its beta map site on April 11. In October, Google announced the launch of Google Local, which blended mapping data with local information such as restaurant reviews, addresses, and movie times.

The move also came one day after French President Jacques Chirac said his country would spend $2.5 billion on six technology projects including a search engine designed to compete with Google (see France’s $2.5B Tech Foray).

Like Google Maps and Yahoo Maps, the beta version of Google Maps in the four European countries comes with an API (application programming interface) that allows programmers to incorporate Google Maps into web pages not connected with Google.

While Google doesn’t allow developers to profit from using its map API, the API has generated a cottage industry of mashups that combine Google Maps with content that ranges from real estate to fast food finders.

Mr. Booth said that the power of maps and local advertising has not been fully exploited.

“The real revenue opportunity comes when there is rich content underneath all of the pins on the map,” he said

France’s $2.5B Tech Foray

France plans six tech projects, including one aimed at Google; observers raise doubts.

Venture capitalists in Europe said Wednesday they are skeptical about French President Jacques Chirac’s plan to spend $2.5 billion on six technology projects, including a search engine to rival Google.

Mr. Chirac said technology and innovation are key to the future of France. In his announcement Tuesday, the president noted there is only one French company among the 30 global firms that spend the most on research. The United States and Japan dominate in new technologies, and Europe needs to forge ahead, he said.

The huge growth of the search engine sector, for example, makes it imperative that France, along with European partners, develop a global product to rival Google and Yahoo, the French president said.

The programs that will receive funding through the French Agency for Industrial Innovation include Quaero, a multimedia search engine that would be used both on computers and mobile phones. Quaero, which is Latin for “I search,” is being spearheaded by French multimedia company Thomson, France Telecom, French search engine developer Exalead, and French universities.

‘We are at war economically with the U.S., India, and China—and Europe is today the big loser.’

France had hoped the German government would also contribute economically to Quaero, but no announcement has been forthcoming. However, German companies, research centers, and universities are involved.

They include media company Bertelsmann’s Arvatis unit, Siemens, MediaSec Technologies, Deutsche Telecom, Thomson-Brandt, Lycos Europe, Grass Valley Germany, the German Research Center for Artificial Intelligence, the Fraunhofer Gesellschaft, and the Universities of Karlsruhe and Aachen.

The other five projects being funded by France include:

• an effort led by Alcatel and French research labs INRIA, CNRS, and CEA, to develop a European standard for delivering television over mobile phones;

• the development of a hybrid diesel car led by French companies Michelin, Valeo, and PSA Peugeot-Citroen;

• a project called Homes, proposed by Schneider Electric and Somfy, which aims to use a new system of heating and lighting to reduce energy consumption within buildings by up to 20 percent;

• an automated subway system called NeoVal, proposed by Siemens and Lohr; and

• a plan to develop plastics from cereals proposed by Roquette and Metabolic Explorer.

Thirty other projects will be considered by year’s end, Mr. Chirac said. He said the French agency for Industrial Innovation should serve as the foundation for a new European industrial policy.

Most European venture capitalists believe that a top-down approach to innovation doesn’t work. Instead of funding giant projects, most venture capitalists argue European governments should instead change employment laws and tax and stock option rules to make it easier for entrepreneurs to set up and run companies.

Still, “being totally sarcastic about it is easy,” said Geneva-based venture capitalist Sven Lingjaerde, founder and president of the European Tech Tour, which promotes investment in European technology startups. “The good thing is that it is a wake-up call; politicians are recognizing we are hitting a wall. We are at war economically with the U.S., India, and China—and Europe is today the big loser.”

Despite many attempts by various governments, Europe still “has no Silicon Valley,” said Mr. Lingjaerde. So, “rather than taking the typical French attitude of ‘we will conquer the world’ the French should concentrate on one project and try to take it to a pan-European level and then, if that works, move on to another area, always concentrating on areas where Europe has competence.”

European Competition

Mr. Lingjaerde argued that one of Europe’s biggest weaknesses is that European countries compete with each other, each funding national projects. A better approach would be for different countries and regions to choose a particular area of competence and the others agree to cede that area and instead concentrate on something else, he said.

And in areas like alternative energy and materials sciences, a unified European approach with government funding could be helpful in setting standards and boosting certain technologies, said Mr. Lingjaerde.

Eric Archambeau, a French venture capitalist working for Munich-based Wellington Partners, believes the top-down approach does work when the project involves local infrastructure projects, such as France’s high-speed trains.

“But when you want to create a market standard, it is very difficult to do it through government,” he said.

Mr. Chirac though, seems convinced the government is taking the right direction.

“At a time when [some] question the dynamism of Europe and of France, and where in the minds of certain people [France’s] future is as a museum country, France is resolutely making the choice of science, innovation, and industry,” Mr. Chirac said in his speech. “It is essential to conserving the ranking of our country in the world and for collectively rediscovering a taste for risk-taking and the pride of innovating.”

Gifts to the US on the eve of President Hu Jintao's trip to Washington

2006-04-13T13:32:00.000+02:00

News from US:The Runaway Trade Giant

As its impact on the U.S. economy expands, China is also growing less vulnerable to American pressure on key issues

Nucor Chief Executive Daniel R. DiMicco sees a train wreck coming. True, Charlotte (N.C.)-based Nucor Corp., America's top steelmaker, had a banner year in 2005. But China now churns out more steel than the U.S., Japan, and Europe combined. Despite its own voracious demand, China has become a net steel exporter. More mills are in the pipeline that DiMicco complains are "massively subsidized" by interest-free loans, an undervalued currency, and export tax breaks. "If China decides to export significant amounts of steel," he warns, "there will be no such thing as competition." Advertisement

DiMicco would love to see the U.S. file a complaint with the World Trade Organization to block a flood of Chinese imports. Trouble is, it's not clear that China's help to steel producers violates WTO rules. Besides, Washington does not want to bring cases it is unlikely to win. How about getting the Feds to file an anti-dumping suit in U.S. court? To succeed, Nucor would have to prove it was already damaged by cheap Chinese imports.

CHINA'S GIFTS. DiMicco's angst highlights a dilemma for Washington: No one quite knows what to do about a China that is growing into a trade giant but in many ways still plays by its own rules. True, China has liberalized greatly since entering the WTO in 2001. And it came bearing gifts on the eve of President Hu Jintao's trip to Washington.

China has agreed to import U.S. beef and medical devices, load all PCs sold in the mainland with legal software, and buy $16.2 billion worth of Boeing jets, Motorola networking gear, and other goods. Another cause for cheer: America's February trade deficit with China shrank by 22.7% to its lowest monthly level in a year. The moves, declared Chinese Vice-Premier Wu Yi, show Beijing's intent to cut the trade gap and "observe the spirit of equality, mutual benefit, and win-win."

Yet worried execs like DiMicco see few signs of progress on the really big issues. They include China's refusal to significantly revalue its currency, its weak enforcement of rampant piracy, and its continued use of cheap credit, subsidies, and nontariff barriers to boost favored industries and companies.

U.S. officials are being more aggressive in bringing antidumping suits and WTO cases when China violates the rules, but they also say it's time for China to go beyond the agreements it made in 2001 and basically grow up. "We need a more balanced relationship," says U.S. Trade Representative Rob Portman, "based on the fact that China is a mature trading partner and a full-fledged WTO member."

WEAK CLOUT. Balancing the relationship, though, takes clout -- clout the U.S. may not have. The U.S. lost its ability to impose unilateral sanctions once China joined the WTO. Even if the U.S. hauled China to Geneva on issues like currency, intellectual property rights, and industry policies, its chances of winning under WTO rules are slight.

U.S. efforts to get China to beef up enforcement of intellectual-property-rights laws are a case in point. For more than a decade, Washington has demanded that Beijing halt the piracy of software, music CDs, and movies. China's laws are fine, and it can crack down when it wants: Witness the scarcity of knockoffs of mascot dolls for the Beijing Olympics.

But due to weak enforcement, trade groups claim U.S. software, entertainment, and publishing companies lose billions in China due to illegal copies. While Beijing announced a 14-point plan on Apr. 11 to crack down on pirates, skeptics say the U.S. shouldn't back off until it sees results. Says Dan Glickman, CEO of the Motion Picture Assn., which leads Hollywood's antipiracy fight: "On these issues where China really has not responded, I think the best leverage is the WTO."

Is it? Even if the U.S. does file a case alleging inadequate enforcement, there's no guarantee it will win. That's because the WTO lacks clear standards defining adequate progress toward enforcement, says China trade expert Nicholas R. Lardy of Washington's Institute for International Economics: "The elephant in the room nobody wants to talk about is that we don't have much leverage." If a suit fails, Beijing could ease the pressure on pirates. "To bring a case and lose it is detrimental," Portman says.

MISSING DATA. Another problem, U.S. trade officials complain, is that many U.S. software companies have been unwilling to gather and supply the hard data needed to mount a successful case. "Our bigger challenge isn't the law," says one official. "It's getting the evidence you need from companies who don't want to be seen as cooperating with the U.S. government."

Besides risking retaliation against their mainland operations, executives aren't sure a successful WTO ruling will solve anything, given China's weak rule of law. "Even if you won, would it really change the way business is done at the provincial level, or change the business environment?" asks Heather Clark, assistant vice-president for Asia of Pharmaceutical Research & Manufacturers of America.

The U.S. has been just as stymied in its efforts to force a revaluation of the yuan. American manufacturers claim the yuan is undervalued by as much as 40%, giving mainland exports a huge price edge. In response to Washington pressure, Beijing last year finally let the yuan fluctuate slightly, but it hasn't gained enough to make a big difference.

News from China: Trade deals reflect resolve to cut surplus

Major commercial deals China has signed with the United States reflect its sincerity to reduce the huge trade surplus, Vice-Premier Wu Yi said in Washington on Tuesday after fruitful high-level negotiations.

Wu, who is heading a 200-strong delegation of business people, told a press conference that Chinese companies had signed 107 contracts with US firms worth $16.2 billion.

The agreements cover sectors ranging from airplanes, electronics, auto parts, heavy equipment and software to cotton and soybeans.

Chinese airlines will buy 80 next-generation Boeing 737 planes, valued at $4.6 billion, in addition to the 70 Boeing 737s ordered in November during US President George W. Bush's visit to Beijing.

The latest agreements were signed at the conclusion of the annual US-China Joint Commission on Commerce and Trade (JCCT) meeting in Washington.

The talks on Tuesday were attended by Wu Yi, US Commerce Secretary Carlos Gutierrez and Trade Representative Rob Portman, both of whom praised China for its commitments.

"In our discussions today, which were very frank and positive, we were able to solve some problems," Portman said at a joint news conference.

To ease trade frictions with the United States, China promised at the meeting that it would reopen its market to US beef, reduce piracy of American goods and begin talks by the end of next year to open its huge government procurement market to foreign firms.

Beef imports were suspended in December 2003 after mad-cow disease was found in Washington State. Other countries including South Korea and Japan have also banned US beef imports since then. China bought $28.4 million worth of US beef in 2003.

On copyright piracy, China requires all computers sold in the country be loaded with legal operating software and to increase enforcement efforts against all forms of copyright piracy.

China also made commitments to streamline the sale approval of American medical devices; to adjust capital requirements that American telecommunications companies see as a major barrier to setting up Chinese operations; and to make sure new rules do not discriminate against US express delivery firms.

Wu reiterated that the United States could also help itself by lifting security restrictions on exports of high technology to China. At the JCCT talks, Washington agreed to explore that issue through top-level talks.

The large purchases in the United States could not fully eradicate the trade deficit, but they delivered a very important message to the US Congress, the public and the media, said Zhou Shijian, a researcher with the Institute of American Studies under the Chinese Academy of Social Sciences. "It shows the sincerity and goodwill of the Chinese Government and enterprises to redress the bilateral trade imbalance," Zhou said.

US-China Business Council President John Frisbie welcomed the outcome of the JCCT talks.

"A comprehensive, step-by-step approach that includes carrots, not only sticks, to develop mutually beneficial trade ties and resolve differences is the best way for the United States and China to make measurable, lasting progress in the commercial relationship," he said.

The US Commerce Department announced yesterday that the bilateral trade gap with China shrank 22.7 percent in February as the country's deficit narrowed 4.1 percent to $65.7 billion.

The trade deficit with China narrowed significantly to $13.8 billion the lowest level since March 2005 reflecting a 16.2 percent drop in imports and a 17 percent rise in exports, it said.

China commited to pushing foward IPR protection

2006-04-11T16:19:00.000+02:00

China has actively pushed forward intellectual property protection in a responsible way and deal with IPR disputes with relevant parties in a cooperative manner, said China's Ministry of Commerce on Tuesday.

The Chinese government is moving on a range of IPR steps and requires computer producers to pre-install legal software programs, said Deputy Minister of Commerce Jiang Zengwei, who is also director of the State Office of Intellectual Property Protection.

Local governments and departments in 330 cities nationwide have purchased and installed legal software programs, and 123 district and county governments are dealing with the installation of legal software programs, the official said.

The State Administration for Industry and Commerce issued a circular in February demanding rectification of the wholesale and retail markets in Beijing, Shanghai, Guangdong and Zhejiang provinces to crash down on fake goods.

Jiang said China has strictly abided by the WTO obligations in terms of IPR protection and deal with IPR disputes with the United States, the EU and Japan in a cooperative way.

PayPal Goes Mobile

2006-04-07T00:17:00.000+02:00

The online payment system PayPal officially announced “PayPal Mobile,” the company’s text-based cell phone service, at a wireless convention Thursday.

PayPal’s interest in a cell phone service has been anticipated by industry watchers, as the U.S. wireless industry tests the idea of one day turning the cell phone into an “m-wallet” to replace cash, credit cards, and even apartment keys.

While U.S. consumers and wireless operators have been eyeing the m-wallet and pilot-testing various systems, Japanese wireless operators like NTT DoCoMo have already run successful services that use the phone for a credit card, ATM card, apartment key, and train ticket.

For now, PayPal’s cell phone service is based on text messaging that users can employ to “Text to Buy” products like CDs, DVDs, shoes, and apparel from stores that have signed up for the service.

PayPal, owned by the Internet auction company eBay, has already signed on 20th Century Fox Home Entertainment, Bravo, MTV, and the NBA Store.

Shares of eBay fell $0.03 to $38.50 in recent trading.

San Jose, California-based PayPal will also enable users to “Text to Give” to charities such as Amnesty International, Starlight Starbright, and UNICEF.

PayPal Mobile will also extend PayPal’s current online payment service to the cell phone, leveraging PayPal’s customer base of 100 million accounts.

"With the overwhelming popularity of mobile phones, the time has never been better for the merging of e-commerce and wireless devices," said PayPal President Jeff Jordan in a statement.

PayPal Mobile will face competition from startups such as Obopay, which has raised money from VC backers Redpoint Ventures, Onset Ventures, and Richmond Capital (see Obopay Gets $10M for M-Wallet).

Secure Cell Phones
With the emergence of the cell phone as a wallet, companies will spend significant time and expenses on assuring customers their finances will be safe on mobiles.

Mr. Jordan pointed out that eBay and PayPal’s already established customer relationships would give the company an edge in the mobile payment industry, which relies on the security of a customer’s finances.

“Our customers have already entrusted their personal and financial information to PayPal,” said Mr. Jordan. “Now, making payments is as easy as sending a text message anytime, from anywhere, for the millions of customers that prefer to use PayPal.”

Users register their cell phone numbers with PayPal, and when purchasing items from the PayPal Mobile service, PayPal will call the customer back to confirm the purchase.

PayPal said it will store customer information on secure servers, not on the mobile telephone, so even if the phone is lost or stolen, the user’s PayPal account remains secure.

M-Wallet
On Wednesday, NTT DoCoMo CEO Masao Nakamura said in a presentation that 10 million subscribers had mobile-wallet-enabled phones, 30 percent of whom are active users, and 60,000 stores are participating.

Mr. Nakamura dazzled conference goers at CTIA, the largest wireless convention in the United States, with a video of “future service developments.”

The video showed a subscriber paying for apartment utilities in a building lobby with a cell phone, and using a motion-sensor-based wireless network to automatically unlock doors.

“We showed the demo of the [motion sensor] service to Prime Minister Koizumi and he loved it,” said Mr. Nakamura.

NTT DoCoMo shares rose $0.02 to $15.01 in recent trading.

But the U.S. is just starting to test text-based cellular commerce systems like PayPal’s, and so far the infrastructure for a mobile wallet world is far from complete in the U.S.

Such a system needs chips in cell phones, ubiquitous wireless networks, and the cooperation of stores, financial services, customers, and wireless operators.

Companies like semiconductor maker Philips and the financial service company Visa found some success with a trial of a technology called NFC (near field communications) for cell phones.

NFC is a short-range wireless technology of several centimeters, which is already being used with “touchless credit cards.” The cards don’t have to be swiped through a magnetic stripe reader, just placed within centimeters of the scanner.

Philips and Visa said a study based in Atlanta included 20 participants who ordered coffee, Wi-Fi services, and movie tickets with an NFC-embedded cell phone.

The Alcatel Effect

2006-04-05T15:58:00.000+02:00

There has been a lot of news in recent months on communications equipment, much of about conaolidation. In October, 2005, corporate networking powerhouse Cisco Systems (CSCO) bought set-top box maker Scientific Atlanta. In November, phone giant SBC closed its acquisition of AT&T (T), and within a matter months announced plans to buy BellSouth (T). Then, on Apr. 2, telecom-equipment giant Alcatel (ALA) bought Lucent (LU).

Even as decades-old brands disappear, a new crop of communications-equipment startups is emerging. Within days, Force 10 Networks, a maker of networking switches used by Google (GOOG) and other Net high-fliers, is expected to file documents announcing its intention to sell shares to the public, sources say. Riverbed Technology, which makes gear to speed data between corporate locations around the world, is also on the verge of filing its so-called S-1, say industry sources. Neither company would comment for this story.

If they pan out, the IPOs would be the first among communications-equipment makers since 2001, analysts say. Others probably won't be far behind. Take Shoretel, which makes new-fangled Net-based phone systems that are catching on with the corporate set due to their sound clarity and extra features. "Shoretel customers talk about their office phones the way people talk about their iPods!" notes JMP Securities analyst Sam Wilson. That enthusiasm could eventually translate to a winning IPO.

NO 1999. Something else that makes these fledglings stand out: They aren't really startups. Many were founded before the telecom crash, but survived -- and now boast impressive customer lists, proven technologies, and solid customer-support operations. "You now have a whole crew of companiesÂ that are ready to go, and who have VCs thatÂ want to start paying the mortgage," says Wilson.

Shoretel was founded in 1998, while Force 10 and BigBand Networks, another fast-growing supplier of broadband gear, came along in 1999. "We'll see another round of IPOs, but it won't be like the 1999 era," says Hassan Ahmed, CEO of Sonus Networks, a seller of voice over Internet protocol (VoIP) gear to phone carriers. "These are companies that have been working for six or seven years, and have established real footholds."

Some of the small fry could get snapped up before they get a chance to go public, as bigger suppliers look to fill out their product portfolios. On Mar. 22, Lucent paid $207 million in an auction to buy the remaining assets of struggling Riverstone Technologies, a vestige of former networking highflier Cabletron Systems.

PHONE SQUEEZE. Healthier outfits can also expect more phone calls. Last December, Alcatel bought a 25% stake in 2Wire, which makes home networking gear. Indeed, rumors are swirling that public companies such as Redback Networks (RBAK), Foundry Networks (FDRY), and even Juniper Networks (JNPR) could be bought (see BW Online, 3/27/06, "What's Next for Nortel"). Within two years, predicts one top investment banker, "Juniper won't be a public company."

Even if they don't find themselves in the crosshairs of a buyer, some companies are likely to land lucrative distribution deals. Mature suppliers may give up trying to push internally-developed products in favor of more innovative fare. "The rate of discussions has gone way up for us, because all of the big guys have holes they need to fill," says Hammerhead Systems founder Rob Keil. "Everything is moving in the right direction for companies like us, who have customers and revenue."

Not all the dealmaking among big telecom bodes well for smaller players. A buying spree by Verizon (VZ) and SBC (which has since taken the name of its former parent, AT&T) means fewer phone companies to sell to, and probably less spending on gear as these behemoths focus on cutting costs. The "service-provider market will be even more unattractive than it has been in the last few years -- and it was already pretty unattractive," says Rick Tinsley, CEO of two-year-old tech startup Silver Peak Systems.

SIEMENS FOR SALE? And more consolidation among the big boys may be on the way. For example, BusinessWeek Online has learned that Siemens (SI) is actively shopping what is left of its communications division. It has already sold off a mobile phone business to Taiwan-based BenQ Corporation. One source says Siemens has been working with consultants from Booz-Allen on its strategic alternatives. While the company has hinted it wanted to keep promising pieces of the business, sources say it is now leaning towards selling off all of the $13.2 billion business -- most likely in chunks, since it's unlikely to find a buyer for the whole thing.

By buying Lucent, Alcatel solidified its position in high-end phone switches, particularly in the U.S. As a result, "Siemens has to decide whether to get bigger or smaller -- and the proponents of getting smaller are winning," says one industry insider who has been approached about buying parts of the unit.

Analysts say Siemens, like Nortel, has struggled to maintain leadership in the most important markets. The Munich-based giant recently saw Deutsche Telecom (DTE) grant a big contract to deliver Net-based TV services to Paris-based Alcatel, for example.

INTERESTED PARTIES. Who might the buyers be? Insiders say big wireless players such as Ericsson (ERICY) or Motorola (MOT) might want the Siemens unit that sells basic phone switches to phone companies. So might Cisco, though the company says it has no plans for another merger along the lines of Scientific Atlanta.

Others, including Avaya (AV), might want the Siemens unit that sells to corporations. If that doesn't pan out, there may be other options. "I've heard of some private equity interest" in some or all of the Siemens units, says Tom Nolle, president of consulting firm CIMI Corp.

However Siemens and the other established players fare, there's no shortage of entrepreneurs stepping up with dreams of becoming the Old Guard of tomorrow.

Malaysia: Formula one race last weekend

2006-03-20T16:10:00.000+01:00

I traveled to Kualar Lumpur, Malaysia last Friday.My colleagues have arranged the F1 tickets for us.This is my first time for me to watch live formula one race,same as most of my Finnish colleagues. The race started at 15:00PM local time, we heard rumor that the traffic would be problematic because around 100K people will drive to the F1 field almost at the same time. We drove to the field starting at 11:00AM, after we arrived, we walked around, our Finnish colleagues bought few Mclaren T shirts and caps because of Kimi Räikkonen.

Kimi showed up in Mclaren exhibition booth around 13:05PM. There were so many Kimi's supporters that most of my Finnish colleagues did not have chance to see him,even we were waiting for his show up for about one hour. Lickly I took two pictures while he was just entering the booth.

There was so big noise in the live F1 race that no one can watch the race without ear plugs.

As we all know Kimi had bad luck in Kualar Lumpur F1 race,we were so disappointed about that! Anyway, it was a great experience for me! good luck Kimi!

My Holiday in CHINA

2006-02-18T23:39:00.000+01:00

I had an wonderful holidy in CHINA, staying together with my parents. This is an tradition for Chinese to stay and celebrate together with families during Chinese new year. During new year's holiday, People usually visit relatives,send new year greetings and have dinner with different relatives almost every day.

They noticed that I have got little bit fat during my 2,5 year's stay in Finland.

2003.12

2006.02

China "unlikely to sell dollars"

2006-01-10T11:00:00.000+01:00

BEIJING, Jan. 10 -- China is unlikely to sell current U.S. dollar assets in its foreign reserves to diversify its holdings, the chief of research at the central bank said on Tuesday, contradicting market speculation.

Media last week had wrongly interpreted a statement from the foreign exchange regulator as meaning that China would sell U.S. dollar assets, Tang Xu, director-general of the research bureau of the People's Bank of China, told Reuters.

The reserves now exceeded $800 billion, he said.

Asked whether the yuan would appreciate sharply, Tang said: "It is unlikely."

The new forex trading system introduced since the currency's 2.1 percent revaluation in July was more flexible and responsive to market supply and demand, he added.

"The general trend is that every country wants to diversify its reserves," Tang said on the sidelines of a conference.

"No one is willing to put all of their eggs in one basket and it is impossible for China to put all its forex reserves, which exceed $800 billion, in one currency.

"But it is unlikely that China would reduce its current dollar assets to increase the proportion of other assets," he said.

Dollar assets still dominated the reserves, whose mix was based on the currencies that denominated China's exports and imports.

On Thursday, China's State Administration of Foreign Exchange issued a statement on its priorities for 2006 and said it would "improve the operation and management of foreign exchange reserves and actively explore more effective ways to utilise reserve assets."

Investors globally and some media took that as a hint that China may diversify into other currency holdings or commodity-based assets.

"That was definitely a misunderstanding," Tang said.

China eyes better yields from forex reserves

2006-01-06T18:47:00.000+01:00

China plans to "optimize the structure" of its record US$769 billion foreign-exchange reserves as it seeks higher returns, the country's currency regulator said.

The State Administration of Foreign Exchange plans "to actively explore ways of investing foreign exchange more efficiently," Hu Xiaolian, director of the agency, said in a statement on its Website after an annual working conference held yesterday. It didn't give details of any changes.

Chinese investors including the central bank owned US$247.6 billion of US Treasuries at the end of October, the world's second-largest foreign holder after Japan. China won't change its "set policy" of buying treasuries, Finance Minister Jin Renqing said in Beijing on October 13.

"I don't expect them to outright sell dollars — that would lead to a crash, which would hurt China," said Marios Maratheftis, a currency strategist at Standard Chartered Plc in London. "It may signal a less aggressive accumulation of dollar reserves." China should invest its foreign exchange reserves in overseas energy resources rather than US Treasuries, Zheng Xinli, deputy director of China's Central Policy Research Office, said on September 22.

China on July 21 ended the yuan's decade-old peg to the US dollar, replacing the peg with a link to a basket of currencies including the euro and yen. The dropping of the peg fueled speculation that China may slow purchases of US dollars that it used to keep the exchange rate stable.

The regulator also said it will scrap foreign-exchange quota limits on outbound investments by domestic companies, part of an ongoing liberalization of the country's capital account controls. Companies will still need permission to invest abroad. The regulator in May 2005 raised the investment Chinese companies can make to US$10 million from US$3 million per project overseas.

In addtion, Hu said that achieving a balance of international payments is of great significance to the healthy development of the Chinese economy. However, problems such as bigger foreign trade surplus and an imbalance of international payments still exist in China's rapidly growing economy, he said.

The conference, held to promote the balance of international payments, was told SAFE would improve the management of foreign exchange in current accounts and facilitate trade and investment in 2006.

SAFE will make further progress in the foreign exchange market and improve the managed, floating exchange rate regime.

In this way, SAFE will improve financial services for small foreign exchange deals, encourage financial institutions to make innovations in commodities and services and enhance monitoring and management of market risks, the conference heard.

Top 10 tech trends for 2006

2005-12-29T23:10:00.000+01:00

Once again, it's time for SiliconValley.com's annual look into a crystal ball for technology trends in 2006. Never mind that the smartest people in tech wouldn't dare make serious predictions about what innovations will catch fire next year. We make a humble try anyway.
Video -- in the form of your favorite TV dramas or Hollywood hit movies -- will come to the big screen in your living room and to the small screen on your cell phone. Whenever you want it. No need to mess around with time-shifting TV devices or mail-order flicks.
Video comes to blogs to begat vlogs. For anybody who's getting tired of reading all those wordy blogs (short for Weblogs) posted on the Internet on every conceivable niche topic, video comes to the rescue. If a picture is worth a thousand words, video might be worth even more. Now anyone can subscribe to vlogs and have the latest installments automatically delivered to the computer desktop (and transferred to a portable player, such as the video iPod).
Meanwhile, Internet phone calls will become more common now that major Web companies Yahoo, Google and Microsoft are making it easier to call from your desktop computer.
For those of us who occasionally depart the virtual world for the real one, defending ourselves from all kinds of biological threats -- real or potential -- becomes a growth industry in 2006. Biotech companies step up to fight what could be the biggest threat of all, from nature itself -- bird flu. Other companies work to find a better, faster way to make vaccines for the wintertime flu that kills many thousands every year.
Wireless networks, already common, will spread so rapidly in 2006 that it will blanket entire cities like San Francisco and Philadelphia. Although WiFi will still dominate as the most common way to connect your laptop computer to the Internet, WiMax will emerge. Already being tested extensively in the United States and abroad, WiMax can carry Internet signals across miles, rather than hundreds of feet as with WiFi.Some predict we'll live in a world served by a global WiMax network that connects us all 24/7.
First there were WiFi hotspots, then hot zones. Now entire cities such as Philadelphia and San Francisco are working to offer free or cheap WiFi to all their residents in 2006.
WiFi is a network that provides wireless connections to the Internet, so that people can use their laptops or mobile Web phones almost anywhere. The cities' ambitious WiFi initiatives have some wondering whether WiFi will become akin to a public utility, and whether it's the government's role to administer it.
But Politics aside, WiFi coverage areas are expected to grow in 2006, especially in urban areas. Already, some are eyeing WiMax technology as the next step. WiMax networks, which are being tested in the United States and abroad, can carry Internet signals across miles, rather than hundreds of feet as with WiFi.
Most WiFi networks consist of thousands of transmitters installed on city streetlights. The transmitters pass data to one another and then out to the Internet using invisible, silent radio waves, in a system known as ``mesh networking.'' A mesh network is analogous to a fisherman's net laid over a city, where each knot is a transmitter. Anyone within a 250- to 500-foot radius of a transmitter can get on the Internet, provided their computer can send and receive WiFi signals.
WiFi's rapid expansion can be found right here in Silicon Valley, where Santa Clara, Cupertino and Sunnyvale have all been provided with WiFi by MetroFi, a mesh networking company based in Mountain View. Internet search giant Google has agreed to provide Mountain View's citizens with WiFi. Pretty soon a person won't need wires to get online from one end of Silicon Valley to the next.
2. Cell phones do everything
It used to be that only the high-end, tons-of-buttons smart-phones could handle any cell phone functions besides voice calls. But now, even much less expensive phones have cameras, Web access, instant messaging and e-mail.
The list of new features that $150-and-under mobile phones have or will have in a matter of months sounds a bit like the Ginsu knives commercial of old: It slices! It dices! Phones these days can play music, show television clips, swipe credit cards, scan product labels, act as debit cards, locate a person on a map, wire money to bank accounts and send video voice mail. Heck, They can even show full-length movies -- that's if anyone will want to stare at their phone for that long.
And as wireless Internet, or WiFi, networks expand in 2006, expect mobile phones to get on the WiFi train, too. Mobile device makers are already selling ``dual-mode'' phones that can work on cellular or WiFi networks, though such devices cost more than $600. Dual-mode phones would solve the problem of signals dropping or weakening when a caller walks inside a building. The idea is that you'd be able to start a phone call over a cell network outside, walk inside and continue that call over an indoor WiFi network.
3. Internet phone calls zoom become more popular now that major Web companies are making it easier.
Over the past year, Google, Yahoo and Microsoft have all added voice chatting to their instant messaging software, allowing ``buddies'' to make calls from one personal computer to another.
Yahoo announced earlier this month it planned to match the features pioneered by Internet phone-calling software Skype so that people could also make PC-to-phone calls in addition to PC-to-PC calls -- for prices cheaper than Skype's. Yahoo's actions will probably persuade even more non-geeks to make cheap Internet calls from their PCs. Voice chatting over the Internet has been around for years, but it's never been such a priority for well-known Web companies. Price wars -- such as Yahoo's -- as well as the increasing number of people who are ditching their traditional wired phone lines will push Internet telephony even further to the fore in 2006.
4. The office moves to the Web Documents, e-mail and spreadsheets move off your desktop computer to the Web.
A host of cCompanies big and small are building new ways to transfer the computer desktop experience onto the Web, and we expect that trend to accelerate in 2006.
On the small side, companies such as Writely, Jotspot and Silveroffice are demonstrating that creating word processing documents and spreadsheets can happen just as easily on the Web as on the desktop. And having the documents on the Web makes it easier for people to collaborate.
No more e-mail attachments. Taking the concept further, a company called Transmedia has fused together music, photo, video, e-mail, calendar and documents software all into one Web-based service that is accessible through an Internet browser.
Large Internet companies are making noise here, too. Google will work with Sun Microsystems on the open-source OpenOffice project, leading many to believe that the Internet giant is eyeing some Web-based office productivity software. And Microsoft is rolling out a service that will enable workers to collaborate on documents using the Web.
5. Stem-cell research advances despite legal challenges
Biotechnology companies will line up to harness the curative potential of stem cells in 2006.
California's $3 billion stem-cell research institute is expected to remain tied up in legal battles well into the spring from lawsuits. But if the lawsuits are thrown out and California's stem-cell money starts flowing in 2006, watch out. It is expected to trigger a stampede of scientists and businesses seeking a piece of the action.
Many people believe stem cells -- the building blocks for every tissue in the body -- can be manipulated to provide cures for Parkinson's disease, diabetes, spinal cord injuries and many other ailments. Major advances in understanding and using the cells were announced this year and more are expected in 2006, with so many researchers flocking to the field.
Despite recent announcements that South Korean researchers have faked their stem-cell data, most people think others will make progress in using stem cells to develop treatments.
6. Biotechs target flu vaccines
Companies will be working hard in 2006 to produce vaccines to thwart a possible worldwide bird-flu epidemic. They'll also look at better, faster ways to produce vaccines for winter flu.
Chiron of Emeryville won a $62.5 million federal contract in October to begin making a vaccine against the most virulent strain of bird flu, dubbed H5N1. And under President Bush's recently announced plan to spend $7.1 billion on bird-flu preparedness, an additional $3.6 billion would be allocated to develop vaccines and other treatments.
In addition, the federal government wants Chiron and other companies to make more vaccine to combat the common winter flu.
Health authorities are encouraging more Americans to get annual flu vaccinations. The government's goal is to get 150 million people vaccinated in 2010, nearly twice the number expected this year.
7. Even small start-ups go global
Three major forces are driving the rise of the mini-multinational -- start-ups that are launched from the get-go as global operations.
First, there's the promise of lucrative foreign markets, which are growing more quickly than in the United States. Some overseas opportunities are now even bigger than here, such as cell-phone sales in China.
Second, U.S. companies can lower their costs and boost profits more quickly by outsourcing work to places like China and India, where labor is cheaper.
Finally, the Silicon Valley model of nurturing start-ups has spread to other regions around the world. Venture capitalists are opening offices in those countries and are getting more comfortable with helping to nurture companies in those foreign markets.
Many companies, seeded by Silicon Valley venture capital firms, set up headquarters in the valley, where they employ high-end engineers, marketing professionals and senior management.
But they have major operations in Bangalore, India, or Shanghai, China, and increasingly elsewhere.
8. Video comes to the blog
Amanda Congdon is the irreverent face of one of the hot tech trends for the coming year: the vlog (that's a video Weblog, for you English speakers).
Congdon's send-up of television newscasts, Rocketboom, makes light of such broadcast staples as the local weather forecast. The ``whether'' man appears, in one recent episode, clad only in underwear and necktie, delivering the day's forecast hostage style.
He peels successive layers of surgical tape off his mouth to report the temperature (17 degrees), wind-chill (feels like 5 degrees) and comedy punch-line (``I'm not sure where I am'').
It has already achieved a level of Internet cult status.
Like podcasts, which exploded in popularity in the past year, anyone can subscribe to vlogs to have the latest installments automatically delivered to the computer desktop (and transferred to a portable player, such as the video iPod).
Sites such as Break.com bring together collections of amateur, short-form videos (mostly aimed at guys who never tire of seeing scantily clad women and videos that would qualify as outtakes from the movie ``Jackass''). Blinkx, meanwhile, lets you search through more than 1 million hours of mainstream newscasts from Bloomberg or Fox News.
We don't think this will replace television anytime soon. But it will clearly find an audience, either on portable devices like the iPod or on cellular phones.
9. On-demand video everywhere
From the big screen in your living room to the grab-your-bifocals-small screen on your cell phone, you'll be awash in video that you can watch, whenever you want it.
Cable television giant HBO has introduced HBO on Demand, which lets some digital cable subscribers summon episodes of original shows like ``Curb Your Enthusiasm,'' older movies, such as ``iI, Robot'' or special programs like Bill MahrMaher's comedy special, ``Victory Begins at Home,'' with thea touch of the remote control.
Meanwhile, a growing number of more popular and classic television shows are available for Internet download through Apple's online iTunes store for the video iPod.
And more Internet video services are in the works to bring movies to a growing array of portable video players, including Sony's PlayStation Portable.
Suddenly, TiVo and other time-shifting devices look as tired as the VCR.
10. Clean technologies
We'll see a continued push to invest in clean technologies in 2006.
The growing evidence of global warming, the stubbornly high price of oil and environmental disasters such as the chemical spill this month in China's southern Guangdong province are all forces driving demand for cleaner energy, better monitoring of energy and other chemical use, and easier ways to clean water.
It helps that some of the best-performing initial public offerings this year have been for solar companies, such as China's Suntech Power and Silicon Valley's SunPower.
Lately, Silicon Valley venture capital firms have stepped up the pace of their investments in the sector, including fuel cell, battery and solar technologies.
VC firms poured a record $425 million in investments into clean-tech start-ups during this year's third quarter, according to the Cleantech Venture Network.
Most venture capitalists expect the clean-tech investment wave to continue into 2006, in part because oil prices have stayed high long enough for many investors to consider this a long-term trend -- not just a passing fad.

Why China Is Tops in Tech Gear ?

2005-12-28T13:28:00.000+01:00

You now have another reason to rail against China. On Dec. 12, the Organization for Economic Cooperation & Development (OECD) announced that China has surpassed the U.S. to become the world's No.1 exporter of tech gear.

The news rounds out a year when Chinese high-tech companies raised their profile worldwide: Lenovo, China's top computer brand, took over IBM's (IBM) PC division. Huawei Technologies, the leading Chinese telecom- and networking-equipment maker, accelerated its overseas expansion. And ZTE, Huawei's cross-town rival in the southern city of Shenzhen, won new customers in developing markets in Asia and Africa, while also teaming up with Cisco Systems (CSCO). Advertisement

What's behind this success? For Beijing's many critics in Washington, the answer is easy: China cheats. Whether it's by depressing its currency's value or by stealing and copying American ideas, the argument goes, the Chinese simply don't play fair. So, the critics reckon, it's no wonder China has become the world's biggest exporter of electronics. An unfair argument? Here's a look behind the hype to see what has driven China's climb.

Are all of those high-tech exports really Chinese? Or are they made by companies based elsewhere that have shifted manufacturing to China?
About 60% of China's exports come from foreign-invested enterprises, says Oded Shenkar, a professor at Ohio State University's Fisher College of Business and the author of The Chinese Century: The Rising Chinese Economy and its Impact on the Global Economy, the Balance of Power, and Your Job. "The reality is that the higher up you go on the technology ladder, the higher the proportion of foreign players," Shenkar says.

He notes that about one-third of China's $60 billion in foreign direct investment last year was for technology-manufacturing ventures. "If you talk about high-tech exports, a lot of it is driven by foreign companies." Not long ago, for instance, Taiwan was the global center for notebook PC manufacturing. Today, Taiwanese companies such as Quanta Computer and Compal Electronics are still leaders in notebooks, but all have moved their production to low-cost mainland factories near Shanghai and Hong Kong.

Aren't the Taiwanese the exception?
No. The same holds true for computer- and phone-makers from the U.S. Dell (DELL) produces PCs at a factory in the southeastern city of Xiamen not only for China but also for export to Japan. The U.S. giant is now building a second factory across the street from the first Xiamen plant. When that's completed, one plant in the complex will be producing machines solely for export.

And Motorola (MOT) has a total of $3.6 billion invested in China. It just opened a new facility in Chengdu, the capital of western Sichuan Province. And Moto has expanded its factories in Hangzhou, near Shanghai, and in Shenzhen, adjacent to Hong Kong. It's no wonder, then, that China is No. 1. Indeed, what's surprising is that it has taken so long for it to get to this position.

If so much of the money comes from abroad, are foreigners behind China's high-tech companies?
Most of the managers at the big-name Chinese IT exporters are locals who rose up through the ranks domestically. But for the smaller companies in booming sectors such as chip design and e-commerce, the entrepreneurs are Chinese who have studied in the West and returned to the mainland.

They're called "sea turtles," a pun on the Mandarin word for "returnees." Some 7.5% of the PhD degrees in science and tech in the U.S. are awarded to Chinese citizens, Shenkar says. And more of them are returning home after getting their degrees, now that there's more opportunity in China. Today, about 25% of the Chinese return, says Shenkar, up from 15% a few years ago.

Are Chinese winning the export game because they have an unfair advantage at home?
It used to be that some Chinese tech companies did do well locally because they enjoyed government backing. But the Chinese market for PCs, cell phones, and consumer electronics has become extremely open and competitive, especially in the four years since China joined the World Trade Organization.

Consider the cell-phone market. Dozens of different companies -- both foreign and domestic -- are vying for the attention of China's 400 million cell users. "The market is overpopulated with cell-phone brands," says Michael Tatelman, the Beijing-based general manager for North Asia of Motorola's mobile-devices division. "It's ripe for consolidation. Nowhere else in the world are there so many brands. The number of mobile-phone brands in the market is unsustainable."

How successful have Chinese tech brands been so far?
It's too early to give an answer on the Lenovo/IBM deal. But many other Chinese companies that have tried to leverage their domestic success to build a global business haven't exactly prospered. Phone makers Ningbo Bird and TCL have struggled this year as their market share for handsets inside China has plunged and high-profile plans to plant a flag abroad have fizzled.

France's Alcatel (ALA) pulled out of a joint venture with TCL this year, less than 12 months after forming the partnership. And TCL's TV joint venture with France's Thomson Multimedia (TMS) has had a difficult time getting started, too.

So in the Chinese cell-phone business, it's back-to-the-future time. Nokia (NOK) and Motorola are once again at the top of the heap, and the locals are foundering. Not that the foreigners want to seem like sore winners. "You will see some really strong China brands in this market, and some of them will go global," says a gracious Tatelman of Motorola. But before that happens, a lot of Chinese phone makers will likely go belly-up.

If the Chinese are so good at high-tech hardware, why isn't China also a software power?
One reason China ranks at the top of the tech-exporter list is that the OECD doesn't include software in its calculations. Throw that into the mix and China falls, because the mainland has no software companies that can compare to hardware powers such as Lenovo and Huawei. For years, Beijing has sought to build up the software industry. But with piracy rates of about 90%, it's monumentally difficult for software companies to make the kind of money they need to grow into global powers.

And it doesn't help that the country's rulers are so concerned about clamping down on dissenting voices. "China still has a problem with how it deals with information," says Shenkar. "When you devote a lot of energy to how you can use the Internet to control your population, maybe you don't think enough of how you can apply it in business."

In which areas may we see China next overtake the U.S. in tech exports?
The Chinese government wants a semiconductor industry. Right now, China depends on foreigners for most of its chip needs -- and on Intel (INTC) and AMD (AMD) for effectively all of its microprocessors. Beijing has been supporting the growth of local players, and China now has several foundries, or make-to-order chipmakers, that are winning business.

The biggest is Shanghai-based Semiconductor Manufacturing International Corp., which is listed on Nasdaq and now owns a big chip fab [factory]in Tianjin that used to be Motorola's (MOT). But the foundry business is rough, and with the industry going through a correction this year, it's been tough for anyone other than world leader Taiwan Semiconductor Manufacturing Co. to make money.

China is also trying hard to develop its own microprocessor, with engineers from the Chinese Academy of Science working on a project, code-named the Godson. AMD in October promised to transfer some microprocessor know-how to the Science and Technology Ministry and to Peking University [the school in the capital that still uses the old-fashioned way of Romanizing the name Beijing], but don't expect either AMD or Intel to face any serious competition from the Chinese for many years to come.

Top Security Trends for 2006

2005-12-28T10:40:00.000+01:00

Security threats will become more sophisticated in 2006, keeping security startups and their customers on their toes.

2005 has been a banner year for cyber-villains. Thanks to hackers, some of the United States’ largest corporations, including financial services giant Citigroup and media powerhouse Time Warner, had sensitive data swiped from their supposedly secure databases.

Smaller companies weren’t immune this year either, with retailer DSW Shoe Warehouse and credit card processor CardSystems, bought by Pay Per Touch in October, both victims of cyber break-ins (see Credit Cards Bar CardSystems).

Data theft wasn’t the only danger in 2005. An Internet worm, Zotob, infected computers at media companies like CNN and financial behemoths like Visa in August. And email nuisances, spam and phishing, were also on the rise.

Will it get better in 2006? Not really, say security experts. In fact, the threats may get worse. That’s because just as security systems become more sophisticated, the threats will become more complex and innovative—all in an effort to stay a step ahead.

Looking forward, security experts see eight major trends in security in 2006. Among them, voice spam is expected to become a growing annoyance as VoIP applications become more widely used. Another concern: cyber-criminals will exploit the low levels of security in mobile communications to gain access to data in laptops and other devices.

Here are the security trends to watch for in 2006:

Phishing Frenzy

Phishing, the practice of sending fraudulent emails to encourage users to divulge personal or financial information, will increasingly target customers of smaller organizations in 2006. Until recently, phishing victims often received email purporting to be from large banks like Citibank and Bank of America or sites like eBay.

But these organizations are deploying greater security measures to combat phishing, forcing scammers to turn to smaller targets. Next year’s targets could include customers of, say, the local credit union, security experts said.

Scammers will aim for residents of a specific town posing as a local financial institution, local governmental organization, or university, predicts Joel Smith, chief technology office for AppRiver, a Gulf Breeze, Florida-based spam and virus filtering service provider (see Worm Poses as FBI or CIA Email).

“We are going to see more regionalized, localized targeting,” he said. “Scammers will look for subscribers of regional ISPs [Internet Service Providers] and send them emails purporting to be from the local credit union.”

For scammers, the upside with such targets could be a higher rate of return. “Small organizations or targets from smaller cities may not have been as exposed to the phishing spams as larger or technologically savvy groups,” says Mr. Smith.

Business Worm’s Rise

Before Zotob struck, computer attacks were often directed at home users. But this worm, which exploited a vulnerability in Microsoft’s Windows operating system, affected businesses, marking the rise of Internet criminals focused on financial gain (see Zotob Heralds Business Worm).

These attacks on businesses are expected to increase next year, said Bruce Schneier, founder and chief technology officer for security firm Counterpane Internet Security. These Internet criminals differ from the hacker hobbyists who were content terrorizing home users in several respects, he said.

“Hobbyist hackers looked for new and clever attacks, while criminals will use whatever works,” he said. “Hobbyists generally didn’t care who they attacked, while criminals are more likely to target individual organizations.”

The big concern? This new breed of cyber-thieves will target proprietary information like trade secrets, or personal data like social security numbers that can be sold on online black markets.

For businesses, the spread of this new breed of worms will mean they’ll have to tweak security policies to institute new security protocols that can react faster to threats.

Insider Threat

Many of the data leaks in 2005 may have stemmed from poor security measures. And while companies spend millions securing their networks from intruders, they often ignore one of the most likely sources of leaks: insiders or company executives who can inadvertently or deliberately leak information.

Many companies that have off-site call centers managed by third parties don’t routinely review their systems to stop leaks, said Joseph Ansanelli, privacy expert and chief executive officer of Vontu, a San Francisco-based company that works to prevent data loss.

Often overlooked, the insider threat will grow in 2006, forcing more companies to add a layer to their network that will monitor the information accessed and distributed by employees (see Q&A: Security Wonk Dan Verton).

Increasing Network Control

The threat of crooked insiders and more stringent compliance regulations will force companies to implement identity-driven networks that control who uses a network. Driving the change is legislation like Sarbanes-Oxley, which calls for specific security measures and complete visibility into network users, devices, addresses, policies, and activity.

The basic network identity services that exist today cannot meet the requirements, said Robert Thomas, president and chief executive officer for network security company, Infoblox.

“The anonymity associated with conventional network deployments has existed for years; however, the repercussions of that anonymity, increasing regulatory compliance pressures, and security concerns over the last year or two have dramatically raised the visibility around these issues and call for a new approach,” he said.

Wireless Security Focus

Hackers are finding it increasingly easy to steal information from devices that contain people’s private data, as a growing number have wireless capabilities, said security experts.

Wireless technologies like Wi-Fi may be more widespread, but many users are still ignorant about the security measures they must use on these networks to keep hackers at bay. Security experts see 2006 as the year when threats on wireless networks will come of age.

As Wi-Fi moves to airplanes, trains, and other public locations, cyber-criminals will seek to exploit the lack of knowledge about mobile security measures to gain access to user information. One prime target? Laptops carried by business users, said MessageLabs, which provides email security and management services.

Increased Security Legislation

Over the last two years, a number of states have enacted laws similar to one in California requiring companies to disclose security breaches to protect state residents from identify theft. In 2006, a federal law along these lines is a strong possibility, security experts said.

Other legislation in the federal pipeline includes a bill that would set standards on what is spyware, how these programs should behave, and what is deemed violations. Spyware are malicious programs that sneak into users’ computers and monitor their usage.

“The legislators will also continue to dictate what types of security measures must be taken in order to prevent unauthorized access to sensitive company information,” said Vontu’s Mr. Ansanelli.

Voice Spam Begins

The popularity of Skype and VoIP will lead to new forms of spam attacks next year, security experts predict. As VoIP applications become more widely used, there will be a rise in voice spam.

That’s because VoIP services lack strong encryption and they can become a target of scammers, said Information Risk Management, an independent security consultancy firm.

“Just as web users can be plagued by pop-up advertisements and spam email, it is expected that VoIP services will be the next target,” said the company in a report. “Users could find calls redirected or hijacked by advertisements.”

Though there are some security solutions for VoIP traffic and equipment, service providers will have to move in faster to nip the problem in its early stages.

Selling to SMBs

Of course, all these new threats can mean new business for security companies. Traditionally, security companies have focused on selling their products to bigger players as large organizations have big IT budgets that will let them spend on securing their networks. But as smaller firms become the targets of security attacks, security startups will pay more attention to them.

Companies offering managed security services, which involves outsourcing the needs to specialists rather than doing it in-house, will be best positioned to capitalize on this trend, security experts said.

In 2006, there’s likely to be a spike in small and medium businesses using managed security services hosted by security companies, said Brad Miller, chief executive officer of Perimeter Internetworking, a managed network security services provider.

This “enables SMBs for the first time to outsource their security and receive pre-integrated services and continuous updates at an affordable price,” said Mr. Miller. “They did not have this option before.”

A Buying Spree in the Middle Kingdom?

2005-12-23T22:35:00.000+01:00

Just as retailers in the West wrap up their busiest selling season, China is gearing up for its version of Christmas. The period when Chinese shopkeepers rake in their biggest sales comes over the Lunar New Year, which this year falls in late January. Advertisement

The good news is that a swelling consumer class is poised to spend plenty of hard-earned yuan on electronics and cars in the upcoming holiday season and on into the new year. The bad news is that the country's consumers can be a tight-fisted, fickle lot.

Everything from mobile phones and flat screen televisions to new homes and automobiles are on the extensive shopping lists of China's consumers for 2006, says a new McKinsey & Co. report. The survey of 6,000 households from 30 cities representing 60% of China's population shows just how quickly the mainland has moved from a production-driven command economy to one increasingly driven by a swelling consumer class.

Indeed, China's recent revision of its gross domestic product shows that 37.8% of China's economy now derives from consumption (see BW Online, 12/16/05, "China's Even Heftier Economy" and BW Online, 12/20/05, "A New Window on China's Growth"). "What we are witnessing in China is the fastest and largest creation of a new consumer class in the history of the world," writes Kevin Lane, a partner in McKinsey's Shanghai office, in a summary of the survey.

There's a lot of good news for the likes of Motorola (MOT ), Lenovo, and Samsung in the findings. For example, 15% of respondents say they intend to buy a mobile phone over the next 12 months, while 10% plan to buy a desktop PC. More than one-half "believe that home ownership is critical to financial security," and 8.5% plan to buy a new home. Eager multinationals, take note: That big-ticket purchase is usually accompanied by a flurry of expenditures on household electronic appliances.

Indeed, the survey shows that 10% are planning to buy a new TV over the next year, with 8.1% going for a flat-screen version. Some 9% will buy a new microwave, while 8% report that they'll splurge on a new washing machines, air conditioners, refrigerators, and even digital cameras. All told, 71% of respondents say they're likely to upgrade furniture and appliances after buying themselves a new home.

GEOGRAPHICAL FACTORS. The spending spree isn't confined to the home, however. Close to half, or 43%, say that "owning a private car is their biggest dream." That's a dream 2.4% of Chinese who responded hope to realize in 2006. It's not surprising that they plan to buy new cars over the next year, given that China's auto penetration is only eight vehicles per 1,000 people, vs. an average of 104 cars in the rest of the world. While that's hard to believe when traveling the clogged and smoggy roads in Beijing and Shanghai, it's welcome news for the likes of General Motors (GM ) and Toyota (TM ).

"For the Chinese, like people all around the world, the auto represents both prestige and personal freedom," says Tim Dunne, a partner at Automotive Resources Asia, a Beijing- and Bangkok-based auto-industry consultancy. "Privacy is also a big factor -- you can talk on your phone, play music, do whatever you want in your own space, when you own a vehicle."

Interestingly, McKinsey's survey shows that the real buying action will happen outside China's already-saturated coastal cities, in the smaller cities of the interior. "Some products are actually on more shopping lists in rural areas and midsize cities than in the largest cities, where the market is becoming saturated," the report says.

FUTURE CONCERNS. So while 10% of consumers in China's biggest cities plan to buy mobile phones in 2006, twice as many in smaller towns say they intend to get a Nokia (NOK ), TCL, or other brand cell next year. And while only 5% in cities like Beijing and Shanghai want new washing machines, 12% of respondents in small towns have the same intention. Similarly, while only 8% in first-tier cities intend to purchase TVs, 15% in China's rural county seats plan to purchase sets.

Another intriguing finding: Your average Chinese is certainly brand-conscious, but not particularly brand-loyal. While 55% of those surveyed say they would prefer having a famous brand when choosing consumer electronics, and 44% and 36% feel that way about food and beverages, respectively, two-thirds of consumers report that they end up leaving the store with a different brand than intended. McKinsey's survey showed an average brand loyalty of only 5% over the 82 brands measured.

Despite Chinese consumers' ambitious plans to buy more goods, multinationals shouldn't get their hopes up too high, at least in the near term. That's because Chinese are still deeply concerned about their health and economic futures -- not surprising, given how the mainland's social safety net has frayed in recent years.

CONTRADICTORY CURRENTS. China still is a nation of savers, with most respondents setting aside one-quarter of their income. Less than one in five report that they're spending more in 2005 than last year. The country's annual per-capita income is only $1,490.

The survey reports that the primary reason Chinese are holding on to their money is to prepare for possible health costs, with some 50% citing this concern, and 43% are saving for retirement. Just 37% of those surveyed feel confident about their financial future. "For most consumers, creating a cash cushion is clearly the number-one priority," the survey says.

So Chinese consumers have big plans to buy everything from spanking new autos to flat-screen TVs, but they're still clearly worried about parting with their money. It may sound contradictory, but it's just another example of the crosscurrents defining the fast-changing behemoth that is China today.

China ranks 6th in world economy

2005-12-20T08:36:00.000+01:00

China on Tuesday revised its GDP (gross domestic product) for 2004 to 15.9878 trillion yuan (about 2 trillion U.S. dollars), up 2.3 trillion yuan, or 16.8 percent from the preliminary figures.

The country's top statistician Li Deshui made the announcement at a press conference of the Information Office of the State Council, citing the result of a national economic survey.

The country has overtaken Italy as the world's 6th biggest economy.

The value-added of the tertiary industry was 6.5018 trillion yuan, 2.1297 trillion more than the annual preliminary estimation announced earlier this year. And the industry's share in the GDP rose from the earlier estimated 31.9 percent to 40.7 percent, an increase of 8.8 percentage points.

The increase of service sector output accounted for the largest part, or 93 percent, of that of the GDP.

Li said China had long been using the Material Product System (MPS) which was developed under the centrally-planned economic system in its national account statistics until the 1980s, resulting in "very weak" statistics for the service sector.

The scope of tertiary industry is turning wide and complex with a large number of units, which have no good means for accounting and statistics, he said.

Meanwhile, along with the economic reform, China has seen a diversified economic development in terms of ownership, and in particular, a dynamic development of private and individual-run service activities.

"It is very difficult to conduct statistical surveys as they are very scattered with frequent changes, resulting in a certain degree of under-coverage," said Li.

While many new services are mushrooming, data on their activities are often underestimated, he acknowledged.

Li added that some of the services affiliated to manufacturing or construction enterprises are estimated but classified into the secondary industry, while more others are neglected.

The value-added of the secondary industry was 7.3904 trillion yuan in 2004, 151.7 billion more than the original data, while the industry's share in the GDP shrank from the preliminarily estimated 52.9 percent to 46.2 percent, a drop of 6.7 percentage points.

"Through the survey, we are able to remove the 'water' from the statistics of the manufacturing sector, in particular, from small-sized enterprises," Li said.

Analysts say some small firms, including township enterprises in the rural areas, have been exaggerating their output figures to help local governments and officials showcase their "political achievements" and seek promotion.

Li said the share of the primary industry was still based on the figure from the annual preliminary estimation, as the industry was not covered in the survey.

The value-added of the primary industry was 2.0956 trillion yuan, and the industry's share in the GDP was 13.1 percent, 2.1 percentage points lower than the preliminary figures.

Result from the latest survey will not affect the nation's macro-economic policy, Li said. "The changes in the figures do notmean the traditional statistics have misled China's policy-making."

The survey's leading group was set up under the State Council, China's cabinet, and headed by Vice Premier Zeng Peiyan, with governments at all levels and concerned departments participating in the event.

More than 3 million enumerators and supervisors were recruited,and another 10 million statistician and accountants from government agencies, enterprises and institutions were mobilized to participate in the survey, according to Li.

More than 30 million questionnaires were collected in the survey with more than 1.06 billion records of firsthand raw data, Li said, adding that a sample survey showed that the comprehensive reporting error was only 4.9 per thousand, within the 1-percent target.

Business confidentiality

"In the publication, utilization and analysis of the survey results, departments and local governments concerned should continue to abide by the Statistics Law and the Regulations on National Economic Survey, to protect business confidentiality and privacy of the respondents, and to honor earnestly the commitmentsof not levying any penalties on the respondents on the basis of survey information," Li Deshui said at the press conference.

The NBS is working on the revision of data back to 1993 on the basis of the revised GDP figures in the survey year, using the trend deviation method which is widely adopted by the Organizationfor Economic Cooperation and Development, Li said.

"Results of the revision will be released on another occasion,"he said.

According to the State Council's decision, the survey results will be used as a basis for the central government and for local governments in compiling 2005 national account statistics, in highlighting economic and social development for the 10th Five-year Plan period (2001-2005), and in preparing the 11th Five-year Development Program and the 2006 annual development plan, he said.

Tertiary industry

The share of China's tertiary industry in the country's 2004 GDP (gross domestic product) has risen from the earlier estimated 31.9 percent to 40.7 percent, up 8.8 percentage points, shows the first-ever national economic survey.

The results from the national economic survey indicate there was an underestimation of the tertiary industry's contribution to China's GDP in 2004, Li said.

According to the survey, the value-added of the tertiary industry was 6.5018 trillion yuan, or 2.1297 trillion more than the annual preliminary estimation.

Of the total increase of 2.3 trillion yuan in the GDP, the increase of the value-added of the tertiary industry accounted for 2.13 trillion, or 93 percent, said Li.

Li said it is the under-coverage of the tertiary industry in the regular statistics that has led to the above situation.

China had long been using the Material Product System (MPS) which was developed under the centrally-planned economic system inits national account statistics until the 1980s, resulting in very weak statistics for the service sector, said Li.

As the scope of the tertiary industry is turning wide and complex with a large number of units, and many new and dynamic services are mushrooming in China along with the rapid economic growth, it is very difficult to conduct statistics surveys, resulting in a certain degree of under-coverage, Li added.

Li mentioned the three sectors where private and individual ownership has taken a large share, including transport, storage, post and telecom; wholesale and retail trade, catering trade; and the real estate. The value-added in the three sectors was about 1.5 trillion yuan larger than the regular preliminary estimation, accounting for 70 percent of the total increase of the tertiary industry.

In addition, some of the services affiliated to manufacturing or construction enterprises are estimated but classified into the second industry, while more others are neglected, said Li.

Currently, the local governments in China are using a unified way to revalue their regional GDP according to the statistics of the national economic survey, said Li.

Li said the new statistics from the national economic survey indicate the structure of the three industries is more consistent with the actual situation in China and more in line with the general level of developing countries.

But he noted that although the revision leads to some increase in the total size of the GDP, the ranking of China's per capita GDP is still below 100th in the world.

Exchange rate reform　　

While answering a question on whether China should step up the reform of its exchange regime, Li said China's exchange rate reform which began on July 21 is "successful," noting "This policy should not be changed so frequently."

"The reform of the exchange rate has been proved a successful one," he said.

The floating exchange rate based on market supply and demand and pegged to a basket of currencies instead of a single currency in the past is a major progress of the reform in this regard, the Chinese official noted.

China allowed its currency, the yuan, to appreciate by a modest 2 percent on July 21.

The aim of the exchange rate reform is to build a managed, floating exchange rate mechanism based on market supply and demandand to maintain the yuan's basic stability at a reasonable equilibrium, said the People's Bank of China (PBoC), or the central bank.

　 Survey result and macro-economic policy

Li told the press conference results from the national economic survey will not affect the nation's macro-economic policy.

The changes in the figures do not mean the traditional statistics have misled China's policy-making, he said, noting that the former figures did reflect the general level and development trend of China's economy, though they might have slightly undervalued the economic volume.

In addition, Li said, the major problems of China's economy, including high energy consumption, low economic efficiency and the extensive mode of economic growth, did not change with the adjustment of statistical figures.

Result of the survey also showed some optimistic implications. For example, it showed that the service industry has contributed greatly to China's economic growth, and consumption is also an important propeller of the economy, according to Li.

"The structure of China's economic growth turned out to be morerational and healthy, which can give us confidence in a long-term rapid growth and will also help the nation in mapping out its macro-economic policy," he said.

AOL-Google Deal Set for Vote

2005-12-19T17:57:00.000+01:00

The board of Time Warner on Tuesday is expected to add its approval of a deal that would give Google a 5 percent stake in America Online for $1 billion while allowing AOL to sell ads on the search engine’s expansive network of Internet sites.

The agreement leaves Microsoft, which is expected to unveil new search technology next month, without a major ally in its battle with Google for domination of the interactive advertising industry. Microsoft had negotiated with Time Warner most of this year in an attempt to develop a working relationship with AOL, but was upstaged in negotiations that ended on Friday.

Yahoo also talked with Time Warner, but pulled out during November after reports it offered 20 percent of Yahoo’s stock for AOL, a deal that would have valued America Online at about $10.6 billion (see Yahoo Denies It Bid for AOL).

The Google deal values AOL at about $20 billion, excluding the anticipated revenue on both sides from increased ad sales and other non-cash sweeteners in the deal. That’s nearly a quarter of the value of Time Warner, which has a market cap of about $82 billion.

For Time Warner, the agreement offers new life for AOL, which has been a problem child for the media conglomerate since the two agreed to merge in late 1999. It also gives Time Warner stronger footing in the online advertising world to complement its inventory of ads in cable, print, and other media.

Several publications, including The Wall Street Journal and the New York Times, said AOL will sell advertising for Google’s search results on AOL’s sites. In return, Google will promote AOL’s sites in the sponsored links in its search results. Google also will add AOL’s collection of online videos to its search results.

Shares of Time Warner closed up $0.16 to $18.00 on Friday. Google climbed $7.62 to $430.15—a new record high. Shares of Microsoft dipped $0.02 to $26.90.

Established Ties
Google provides AOL with search technology. The relationship is set to end next year, but if the deal goes through, it will continue for another five years. In other words, even as Microsoft launches its biggest assault ever on search, Google will have managed to defend the greenest part of its turf for the next six years.

Google, which brought in revenue of $1.03 billion last year, makes money primarily through online ads. And 12 percent of the revenue that AdSense, Google’s advertising program, generated last year came from AOL.

So it wasn’t a surprise that Microsoft targeted AOL earlier this year, trying to convince it to switch to MSN’s search technology. It was at that point that Yahoo reportedly entered the fray.

“If you’re large and successful, you don’t want to lose your biggest customer to your biggest competitor,” said Scott Kessler, an analyst with Standard & Poor’s. “Next year will be a big year for Microsoft and search. Really, the last thing Google wanted to see was its biggest customer bolting to its biggest competitor’s new offering.”

As an investment, this move might make sense for Google, as it gets a piece of a company that is rapidly growing its revenue from online ads.

What's AOL Worth?
But for Time Warner, it doesn’t make too much sense, points out Tom Forte, equity analyst with Geneva Investment Management of Chicago. He believes a $20-billion valuation for AOL is on the low side.

“The notion of selling a 5 percent stake to Google for $1 billion doesn’t meet my requirements for giving cash back to shareholders, not when you’re talking about a $12.5-billion stock repurchase program,” said Mr. Forte. “The upside is that it meets the requirement of the company at the end of the day as it retains a majority stake in AOL.”

Billionaire financier Carl Icahn has been repeatedly attacking Time Warner on the issue of shareholder value (see Icahn Warns Time Warner).
´
t doesn’t necessarily make complete sense for Google either. If anything, this highlights the Mountain View, California, search giant’s vulnerability, according to Rick Summer, an analyst with Morningstar. It would take Google four years to recover $1 billion from AOL, he said.

“This highlights a larger issue,” said Mr. Summer. “If they have to take this to the extreme, if they had to buy all their content relationships and wait four years, this business would look substantially different.”

China, US should make bigger "cake of trade" for win-win results

2005-12-12T23:50:00.000+01:00

Chinese Commerce Minister Bo Xilai has called on the United States to work with China to make a bigger "cake of trade" for win-win results.

"We should continue expanding two-way trade from a long-term perspective on the road of win-win cooperation," he said at a dinner of the American Chamber of Commerce in China held in Beijing on Friday.

Citing the framework agreement on China's purchase of 70 Boeing planes signed during President George W. Bush's successful visit to China late last month, Bo said China is expected to need 500 more planes by the year 2010 and more than 2,000 in the year 2020."The Chinese market is still at the puberty stage, and this is the foundation lies for our cooperation," the minister said.

Hailing the signing of the agreement between China and the United States on China's textile export, which the minister described as a win-win deal, Bo said if the two countries could face trade friction in the spirit of mutual respect and keep composure, China and the United States would surely get along well in bilateral trade.

On the much talked-about trade deficit between the two countries, the minister said trade between China and the United States is complementary rather than competitive.

"Some people in the United States are complaining that China's exports have resulted in the loss of jobs there. However, as far as I know, thanks to growing China-US trade, the jobs lost in the manufacturing sector have been more than offset with new jobs in the circulation field," Bo said.

In fact, he added, China has earned a very tiny proportion of the profits from manufactured goods exported to the United States, and US importers and retailers have got the lion's share of the profits.

Moreover, China has used a fairly big part of its hard-earned foreign exchange to buy US treasury bonds, he said.

"On the whole, trade between China and the United States is balanced, and China is importing an increasing number of US products," Bo said, adding that China has become the fourth biggest market of the United States this year.

On the issue of intellectual property rights (IPR), the minister said China has set IPR protection as a state policy, which is vital for the country to cultivate its capability of independent innovation.

China welcomes overseas investors to cooperate in this field, and will take seriously any case of IPR infringement, he said.

How is everything in Harbin?

2005-11-26T15:05:00.000+01:00

Everyone knows the tragedy happened in north east China city Harbin last few days. I found one website which is following the accident every day.Let's hope all the best to people in Harbin.

China environmental news

The "third wave" in China-US relations

2005-11-20T06:47:00.000+01:00

The China-US relations have traversed a course over 30 years. It is by no means a smooth journey but full of twists and turns.

Upon reflection, one may say the relations actually met three waves:

The first wave: China visit by Richard Milhous Nixon.

As a matter of fact, the China-US ties started from a low ebb. After the founding of P.R. China in 1949, the US Department of State issued a "while paper" giving a bitter account on why the United States lost China. Chairman Mao Zedong responded by writing the article ""Farewell, Leighton Stuart!" The ties remained frozen ever since.

International situation changes, however. By the year 1972, China had long been in bad terms with what once been its "big brother", the Soviet Union, while the United States was getting a lower hand in its fight against this same superpower. It is precisely out of the need of containing the Soviet Union that China and the United States found their point of common interest. President Nixon seized the opportunity and paid China an "ice-breaking" tour, which resulted in strategic agreement between the two sides and formed a strategic triangle among the three. This initiated the first wave of Sino-US ties, which lasted until the late 1980s.

The second wave: during the late Clinton administration.

The China-US relations, if we say normalized through Nixon's visit, constantly lacked a strategic tone. The ties, after surviving Lee Teng-hui's US visit in 1995, climbed out of the bottom bit by bit, but headed for an unclear direction. Things turned better when, following former president Jiang Zemin's visit to the United States, president Clinton returned a visit and the two countries reached an agreement to "construct strategic partnership". This historical event directly led to the second wave in the history of China-US ties, until ties were plunged again to the bottom when the United States bombed the Chinese embassy in Yugoslavia in 1999 spring.

The third wave: post "September 11".

The happening of "September 11" crated an opportunity for improving relations. Washington needed Chinese help in its fight against terror and Beijing responded. As a result, as former Secretary of State Colin Powell put it, the China-US relationship was "at the best period since the establishment of diplomatic relations".

No doubt, during the third wave there are also friction and setbacks. A wide-spread argumentation is that China, taking advantage of US terror fight, launched attacks in all directions and slipped into Africa and South America to "nip away" US interests, and it will strengthen itself and pose a threat to the United States. Hence the "containment" theory.

Meanwhile, some other Americans argue that China's development is an opportunity not only for the United States but for the world as a whole. Hence the "opportunity" theory, especially in economic and trade areas.

In fact, this is only on the surface. Here the deeper reason is, along with the advancement of globalization, both China and the United States are deeply involved into each other in political and economic fields, forming a new type inter-dependence and therefore generating a strong driving force from inside to push forward the relations.

It is from this facet that we see the third round of surging tide. It is in nature unlike the previous two rounds. The first two are temporary and relations could sour at any time or even immediately once the basis for cooperation vanishes; while the third one is perpetual since both sides have been deeply involved into the tide of globalization. This is crystal clear considering the intensive China visits by US high-level officials in recent two months.

Therefore, we have good reason to believe that this new wave of China-US ties is bound to be heading for a long-term, positive direction, and is sure to push the relations to a new high.

Finland: Mobile TV network license generates interest

2005-11-11T19:03:00.000+01:00

Finland will be the first European country to open a commercial mobile television network. The Finnish Ministry of Transport and Communications will open a competitive bidding process for the network license on 14 November 2005. The period of application for the license will end on 31 January 2006.

Finnish network company Digita is interested in the license. The telecom company Elisa is also planning to apply for the license, and Finnish-Swedish TeliaSonera has not excluded the possibility of applying either.
New network technology has been trialled in the Helsinki metropolitan area, and operators have received positive feedback from users. According to Pekka Pesari, TeliaSonera's Development manager, consumers are also willing to pay for the service. The trial also revealed some deficiencies. Changing the channel takes too long, for example.

Nokia, EMI, Free Record Shop and Robert's Coffee Promote Local Download of Mobile Content

2005-11-04T12:09:00.000+01:00

The consumers are now able to download the latest music and related content from EMI artists to their phones in selected Free Record Shop music stores and Robert's Coffee cafes in Helsinki area, Finland. The service is called bFree.

The content download is made possible with Nokia Local Content Channel Solution, CoolZone, launched earlier today. CoolZone is a local delivery channel for any digital content and uses Bluetooth technology to distribute the content to the consumers' phones in retail locations. The service is always customized according to the retailer's or service provider's own brand.

The bFree service offers the consumers not only music, ring tones, wallpapers and videos but also CD and video top 10 lists, and coupons to participating stores. Once music fans enter a participating store, they can download the bFree application to their phone, enabling them to browse available content. During the trial period, content downloads are free of charge, and closely linked to existing campaigns in the store.

"Rich digital content is widely available and requires an efficient distribution channel. Local mobility solutions create new types of business possibilities to individuals, location owners and enterprises. CoolZone is a Bluetooth technology based content distribution system available to any retailer or location owner who wants to offer or sell digital content to their customers, and thus enhance the in-store experience," said Sakari Kotola, Director, Nokia Ventures Organization.

Doug Lucas, vice president of digital development and distribution for EMI Music in Europe said: "EMI wants to make sure that fans are provided with easy access to new music and the music of the artists they love in the most direct and effective way. This deal gives us a new and innovative means of doing that."

"bFree helps us appeal to customers as number one entertainment shop chain where you can experience something new each visit. With bFree we can offer contemporary extra services and campaigns as well as digital content outside our internet shop. Together with Robert's Coffee we create our customers the possibility to familiarize themselves with latest news of the music world in two different kinds of environment" said Elena Kataja, General Manager, Free Record Shop.

"One of the aspects of the service is using CoolZone to cross promote products to customers visiting Free Record Shop and Robert's Coffee. We have similar customers segments and locations, which gives great possibilities for that. This also fits well with our new netcup concept which enables consumers to surf Internet when enjoying a cup of coffee in our coffee shops," said Tomi Miininen, Managing Director, Robert's Coffee.

The CoolZone solution consists of three elements: Nokia Local Content Channel Client software (Symbian for the Series 60 devices, Java for Nokia Series 40 and other manufacturers' phones), Nokia Service Point LCP10 and Nokia Service Manager LCM10 management system. While the service is currently Bluetooth based, WLAN will be added in the near future, as more phones will offer WLAN capability.

CoolZone will be demonstrated at the Nokia Mobility Conference 2005 in Palau de Congressos de Catalunya, Barcelona, Spain during November 2-3, 2005 with content from EMI.

bFree is available in three Free Record Shop music stores and three Rober's Coffee cafes in Helsinki area, Finland.

About EMI Music

EMI is the world's largest independent music company, operating directly in 50 countries. Its EMI Music division represents more than 1,000 artists spanning all musical tastes and genres. Its record labels include Angel, Astralwerks, Blue Note, Capitol, Capitol Nashville, EMI Classics, EMI CMG, EMI Records, EMI Televisa Music, Manhattan, Mute, Parlophone and Virgin.

www.emigroup.com

About Free Record Shop

Free Record Shop is a number one entertainment retail chain selling music, movies and games. Free Record Shop is a Dutch based company operating in five countries in Northern Europe with more than 300 shops. Free Record Shop sells also a variety of digital products in its internet shops. FRS is known for being a front runner in entertainment retailing always looking for new possibilities and products to ensure customer satisfaction and interest.

www.frs.fi

About Robert's Coffee

Robert's Coffee is the biggest coffee shop chain in the Nordic Countries that has its own gourmet coffee roastery. The chain has coffee product process in its own hands - from coffee tree to the cup. The secret of the cup is the fresh roasted gourmet coffee. Robert's Coffee was founded by Robert Paulig in Helsinki, Finland in 1987. Nowadays there is almost 50 coffee shops in Finland, Sweden, Estonia and in Denmark.

www.robertscoffee.com

Note:

Additional information for Nokia Local Content Channel Solution, CoolZone can be found from www.nokia.com/localcontent or www.nokia.com/coolzone

Additional information for consumers can also be found from http://coolzone.nokia.com

Nokia Mobility Conference takes place on November 2 - 3, 2005 in Barcelona, Spain.

For more information, please visit: www.nokia.com/nmc

China, India Superpower? Not so Fast!

2005-11-01T05:11:00.000+01:00

By Pranab Bardhan

The media, particularly the financial press, are all agog over the rise of China and India in the international economy. After a long period of relative stagnation, these two countries, nearly two-fifths of the world population, have seen their incomes grow at remarkably high rates over the last two decades. Journalists have referred to their economic reforms and integration into the world economy in all kinds of colorful metaphors: giants shaking off their "socialist slumber," "caged tigers" unshackled, and so on. Columnists have sent breathless reports from Beijing and Bangalore about the inexorable competition from these two new whiz kids in our complacent neighborhood in a "flattened," globalized, playing field. Others have warned about the momentous implications of "three billion new capitalists," largely from China and India, redefining the next phase of globalization.

While there is no doubt about the great potential of these two economies in the rest of this century, severe structural and institutional problems will hobble them for years to come. At this point, the hype about the Indian economy seems patently premature, and the risks on the horizon for the Chinese polity – and hence for economic stability – highly underestimated.

Both China and India are still desperately poor countries. Of the total of 2.3 billion people in these two countries, nearly 1.5 billion earn less than US$2 a day, according to World Bank calculations. Of course, the lifting of hundreds of millions of people above poverty in China has been historic. Thanks to repeated assertions in the international financial press, conventional wisdom now suggests that globalization is responsible for this feat. Yet a substantial part of China's decline in poverty since 1980 already happened by mid-1980s (largely as a result of agricultural growth), before the big strides in foreign trade and investment in the 1990s. Assertions about Indian poverty reduction primarily through trade liberalization are even shakier. In the nineties, the decade of major trade liberalization, the rate of decline in poverty by some aggregative estimates has, if anything, slowed down. In any case, India is as yet a minor player in world trade, contributing less than one percent of world exports. (China's share is about 6 percent.)

What about the hordes of Indian software engineers, call-center operators, and back-room programmers supposedly hollowing out white-collar jobs in rich countries? The total number of workers in all possible forms of IT-related jobs in India comes to less than a million workers – one-quarter of one percent of the Indian labor force. For all its Nobel Prizes and brilliant scholars and professionals, India is the largest single-country contributor to the pool of illiterate people in the world. Lifting them out of poverty and dead-end menial jobs will remain a Herculean task for decades to come.

Even in China, now considered the manufacturing workshop of the world (though China's share in the worldwide manufacturing value-added is below 9 percent, less than half that of Japan or the United States), less than one-fifth of its labor force is employed in manufacturing, mining, and construction combined. In fact, China has lost tens of millions of manufacturing jobs since the mid-1990s. Nearly half of the country's labor force remains in agriculture (about 60 percent in India). As per acre productivity growth has stagnated, reabsorbing the hundreds of millions of peasants will remain a challenge in the foreseeable future for both countries. Domestic private enterprise in China, while active and growing, is relatively weak, and Chinese banks are burdened with "bad" loans. By most aggregative measures, capital is used much less efficiently in China than in India, even though in terms of physical infrastructure and progress in education and health, China is better poised for further economic growth. Commercial regulatory structures in both countries are still slow and heavy-handed. According to the World Bank, to start a business requires in India 71 days, in China 48 days (compared to 6 days in Singapore); enforcing debt contracts requires 425 days in India, 241 days in China (69 days in Singapore).

China's authoritarian system of government will likely be a major economic liability in the long run, regardless of its immediate implications for short-run policy decisions. In the economic reform process, the Chinese leadership has often made bold decisions and implemented them relatively quickly and decisively, whereas in India, reform has been halting and hesitant. This is usually attributed to the inevitably slow processes of democracy in India. And though this may be the case, other factors are involved. For example, the major disruptions and hardships of restructuring in the Chinese economy were rendered somewhat tolerable by a minimum rural safety net – made possible to a large extent by land reforms in 1978. In most parts of India, no similar rural safety net exists for the poor; and the more severe educational inequality in India makes the absorption of shocks in the industrial labor market more difficult. So the resistance to the competitive process of market reform is that much stiffer.

But inequalities (particularly rural-urban) have been increasing in China, and those left behind are getting restive. With massive layoffs in the rust-belt provinces, arbitrary local levies on farmers, pervasive official corruption, and toxic industrial dumping, many in the countryside are highly agitated. Chinese police records indicate a sevenfold increase in the number of incidents of social unrest in the last decade.

China is far behind India in the ability to politically manage conflicts, and this may prove to be China's Achilles' Heel. Over the last fifty years, India's extremely heterogeneous society has been riddled with various kinds of conflicts, but the system has by and large managed these conflicts and kept them within moderate bounds. For many centuries, the homogenizing tradition of Chinese high culture, language, and bureaucracy has not given much scope to pluralism and diversity, and a centralizing, authoritarian Communist Party has carried on with this tradition. There is a certain pre-occupation with order and stability in China (not just in the Party), a tendency to over-react to difficult situations, and a quickness to brand dissenting movements and local autonomy efforts as seditious, and it is in this context that one sees dark clouds on the horizon for China's polity and therefore the economy.

We should not lose our sense of proportion in thinking about the rise of China and India. While adjusting its economies to the new reality and utilizing the new opportunities, the West should not overlook the enormity of the economic gap that exists between it and those two countries (particularly India). There are many severe pitfalls and roadblocks which they have to overcome in the near future, before they can become significant players in the international economic scene on a sustained basis.

Pranab Bardhan is Professor of Economics at the University of California, Berkeley, and co-chair of the MacArthur Foundation-funded Network on the Effects of Inequality on Economic Performance. He is Chief Editor of the Journal of Development.

China's Next Big Boom Could Be the Foul Air

From NY times

The steady barrage of statistics trumpeting China's rise is often greeted elsewhere as if the figures were torpedoes and the rest of the world a sinking ship. Economic growth tops 9 percent! Textile exports jump 500 percent! Military spending up! Manufacturing up!

What should the Chinese government do to control pollution? The numbers inflame the exaggerated perception that China is methodically inhaling jobs and resources and, in the process, inhaling the rest of the planet. Burp. There goes the American furniture industry. Burp. Thanks for your oil, Venezuela.

But one statistic offered last week by a top Chinese environmental official should stimulate genuine alarm inside and outside China. The official, Zhang Lijun, warned that pollution levels here could more than quadruple within 15 years if the country does not curb its rapid growth in energy consumption and automobile use.

China, it seems, has reached a tipping point familiar to many developed countries, including the United States, that have raced headlong after economic development only to look up suddenly and see the environmental carnage. The difference with China, as is so often the case, is that the potential problems are much bigger, have happened much faster and could pose greater concerns for the entire world.

"I don't think it will jump four or five times," Robert Watson, a senior scientist with the Natural Resources Defense Council, said of the pollution prediction by Mr. Zhang. "But it could double or triple without too much trouble. And that's a scary thought, given how bad things are now."

China is already the world's second-biggest producer of greenhouse gas emissions and is expected to surpass the United States as the biggest. Roughly a third of China is exposed to acid rain. A recent study by a Chinese research institute found that 400,000 people die prematurely every year in China from diseases linked to air pollution.

Nor does China's air pollution respect borders: on certain days almost 25 percent of the particulate matter clotting the skies above Los Angeles can be traced to China, according to the United States Environmental Protection Agency. Environmental experts in California predict that China could eventually account for roughly a third of the state's air pollution.

The air problem could become a major embarrassment if, as some experts believe, Beijing does not meet its environmental targets for 2008, when the Olympic Games will be played here.

For the Chinese government, the question is how to change the country's booming economy without crippling it. President Hu Jintao has made "sustainable development" a centerpiece of his effort to shift the country from unbridled growth to a more efficient economy. Mr. Hu and Prime Minister Wen Jiabao have repeatedly mentioned environmental protection in speeches.

The political attention comes as environmental problems are begetting social and economic problems. Violent riots have erupted in the countryside over contaminated water, stunted crops and mounting health woes. In a handful of villages, farmers have stormed chemical factories to stop the dumping of filthy water. Roughly 70 percent of China's rivers and lakes are polluted. In cities, people drink bottled water; in the countryside, most people are too poor to pay for bottled water, so they boil polluted water or simply drink it.

Public anger is also rising in cities. In some, air pollution is so thick that on the worst days doctors advise, impractically, against going outside. Last week, hundreds of people living in the Beijing outskirts protested plans for a factory they fear would inundate the neighborhood with pollution.

The severity of the situation has created an opening for environmentalists in and out of the government. Environmentalism is a chic issue for college students, who have participated in garbage cleanups and joined the growing number of nongovernment organizations focused on pollution. The once-meek State Environmental Protection Administration, or SEPA, has become more aggressive in identifying and going after polluters and calling for reforms.

But the political and practical obstacles are formidable. Car ownership has become part of the Chinese middle-class dream, and the car industry has become a major contributor to tax coffers and a force in the overall economy.

What should the Chinese government do to control pollution? Industrial pollution is difficult to control because local officials often ignore emissions standards to appease polluting factories that pay local taxes. SEPA has closed factories, only to see them reopen weeks later. To make a serious reduction in air pollution, experts say, tougher, enforceable standards are needed, and many factories would need new pollution control equipment.

"There has to be the political will," said Steve Page, director of the E.P.A office of air quality planning and standards. "The challenge they face is how will these plants be lined up and told this will happen?"

Politically, the Communist Party has based its legitimacy on delivering economic growth and understands that the boom cannot be taken for granted: high growth is needed simply to keep unemployment in check, and top leaders fear that a slowdown could lead to social instability. Local officials are promoted, foremost, for delivering economic growth. This is why environmental officials have pushed for a new "green G.D.P.," which would alter how gross domestic product is calculated to reflect losses inflicted by environmental degradation.

The party is suspicious of environmental groups because of the role similar groups played in promoting grass-roots democracy in the "color" revolutions of central Asia. Human Rights Watch reported that some environmentalists were recently arrested.

But if there is resistance, there is progress, too. A law taking effect next year will require that China produce 10 percent of its energy from renewable sources by 2020. Fuel efficiency standards for new cars are already stricter than those in the United States. At an air pollution conference last Monday, environmental officials solicited advice from their peers in Europe and the United States.

Mr. Page, the E.P.A. official, praised Chinese officials and said China is considering the sort of regional pollution abatement strategies used in the United States. "They are wrestling with a lot of the same pollution problems that we wrestled with several years ago and that, to some extent, we still are grappling with," said Mr. Page, who attended the conference.

Ma Jun, an independent environmentalist based in Beijing, also praised the efforts by SEPA. Mr. Ma said China's status as the "workshop of the world" made it inevitable that its share of the world's pollution would increase. But he also cautioned that too many government ministries remained consumed by economic development. He said the government also needed to recognize the "environmental rights" of citizens.

"The pollution problem," he said, "is very serious."

Flextronics stock price down nearly 25% this week

2005-10-28T15:07:00.000+02:00

Flextronics fell $2.90, to close at $9.20, after saying Tuesday it expects to post a third-quarter net profit of between 15 cents and 17 cents a share. Excluding one-time items, the company forecast a profit of 18 cents to 20 cents a share, on revenue in a range of $4 billion to $4.2 billion.

However, analysts had forecast Flextronics to earn 25 cents a share, on $4.56 billion in revenue.

On a conference call with industry analysts, Chief Executive Michael Marks said Flextronics continues to be impacted by the divestitures of its semiconductor and network services businesses as well as the loss of European cellphone customers Alcatel and Siemens AG over the last year.

The company also makes computing and other electronic products for larger technology firms such as Hewlett-Packard Co. and Sony Ericsson. Marks said those companies were the only Flextronics customers to contribute more than 10% to the company's revenue during the quarter.

Credit Suisse First Boston analyst Michael Walker lowered his rating on Flextronics to neutral from outperform, citing the company's cellphone business issues as a main reason for his downgrade.

Walker said cellphones were Flextronics' "bread and butter and the fastest growing outsourcing end market, (and) the company's biggest problem. "Flextronics is telling us that its design effort has failed to keep the company from falling behind, if not losing share to, Asian (manufacturers)."

With $15.6 billion in revenue over the past year, Flextronics is the largest of the so-called electronics contract manufacturers. Its main competitors include Solectron

SLR3.53, -0.05, -1.4%) , with $10.4 billion in sales over the same period; Jabil Circuit (JBL:Jabil Circuit Inc JBL29.08, -0.58, -2.0%) and Celestica Inc.

But all the main companies in the sector have seen their profits shrink, or grow at very low rates due to factors such as competition from Asia and low margins.

In addition to its weak third-quarter forecast, Flextronics reported a second-quarter loss of $2.4 million, to break even on a per-share basis, on $3.9 billion in revenue, compared to a profit of $98.5 million, or 16 cents a share, on revenue of $4.14 billion during the same period a year ago.

Excluding one-time items, the electronics contract manufacturer would have earned $101.3 million, or 17 cents a share. However the results fell short of the estimates of analysts surveyed by Thomson First Call, who forecast a profit of 19 cents a share on $4.1 billion in revenue.

The one-time items included $50.3 million in pre-tax restructuring charges, $33.5 million in charges related to closing and consolidating manufacturing facilities, and $14.6 million in amortization expenses.

Flextronics said it recorded a pretax gain of $70.7 million related to the sale of its semiconductor and network services divisions. The company sold its semiconductor business to AMIS Holdings, the parent company of AMI Semiconductor, and merged its network services division with Telavie, a company owned by private equity firm Altor 2003 Fund.

China Luring Foreign Scholars to Make Its Universities Great

2005-10-28T09:15:00.000+02:00

From NY times

When Andrew Chi-chih Yao, a Princeton professor who is recognized as one of the United States' top computer scientists, was approached by Qinghua University in Beijing last year to lead an advanced computer studies program, he did not hesitate.

It did not matter that he would be leaving one of America's top universities for one little known outside China. Or that after his birth in Shanghai, he was raised in Taiwan and spent his entire academic career in the United States. He felt he could contribute to his fast-rising homeland.

"Patriotism does have something to do with it, because I just cannot imagine going anywhere else, even if the conditions were equal," said Dr. Yao, who is 58.

China wants to transform its top universities into the world's best within a decade, and it is spending billions of dollars to woo big-name scholars like Dr. Yao and build first-class research laboratories. The effort is China's latest bid to raise its profile as a great power.

China has already pulled off one of the most remarkable expansions of education in modern times, increasing the number of undergraduates and people who hold doctoral degrees fivefold in 10 years.

"First-class universities increasingly reflect a nation's overall power," Wu Bangguo, China's secondranking leader, said recently in a speech here marking the 100th anniversary of Fudan, the country's first modern university.

The model is simple: recruit top foreign-trained Chinese and Chinese-American specialists, set them up in well-equipped labs, surround them with the brightest students and give them tremendous leeway. In a minority of cases, they receive American-style pay; in others, they are lured by the cost of living, generous housing and the laboratories. How many have come is unclear.

China is focusing on science and technology, areas that reflect the country's development needs but also reflect the preferences of an authoritarian system that restricts speech. The liberal arts often involve critical thinking about politics, economics and history, and China's government, which strictly limits public debate, has placed relatively little emphasis on achieving international status in those subjects.

In fact, Chinese say - most often euphemistically and indirectly - that those very restrictions on academic debate could hamper efforts to create world-class universities.

"Right now, I don't think any university in China has an atmosphere comparable to the older Western universities - Harvard or Oxford - in terms of freedom of expression," said Lin Jianhua, Beijing University's executive vice president. "We are trying to give the students a better environment, but in order to do these things we need time. Not 10 years, but maybe one or two generations."

Nonetheless, the new confidence about entering the world's educational elite is heard among politicians and university administrators, students and professors.

"Maybe in 20 years M.I.T. will be studying Qinghua's example," says Rao Zihe, director of the Institute of Biophysics at Qinghua University, an institution renowned for its sciences and regarded by many as China's finest university. "How long it will take to catch up can't be predicted, but in some respects we are already better than the Harvards today."

In only a generation, China has sharply increased the proportion of its college-age population in higher education, to roughly 20 percent now from 1.4 percent in 1978. In engineering alone, China is producing 442,000 new undergraduates a year, along with 48,000 graduates with masters' degrees and 8,000 Ph.D's.

But only Beijing University and a few other institutions have been internationally recognized as superior. Since 1998, when Jiang Zemin, then China's leader, officially began the effort to transform Chinese universities, state financing for higher education has more than doubled, reaching $10.4 billion in 2003, the last year for which an official figure is available.

Xu Tian, a leading geneticist who was trained at Yale and still teaches there, runs a laboratory at Fudan University that performs innovative work on the transposition of genes. On Aug. 12 his breakthrough research was featured on the cover of the prestigious journal Cell, a first for a Chinese scientist.

Beijing University drew on the talents of Tian Gang, a leading mathematician from M.I.T., in setting up an international research center for advanced mathematics, among other high-level research centers. Officials at Beijing University estimate that as much as 40 percent of its faculty was trained overseas, most often in the United States.

The president of Yale University, Richard C. Levin, interviewed in Shanghai, where he was the featured guest at Fudan's centennial celebration in late September, also had high praise for China's students.
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Graphic China's Boom in Higher Education
China's Boom in Higher Education

"China has 20 percent of the world's population, and it is safe to say it has more than 20 percent of the world's best students," he said. "They have the raw talent."

But Mr. Levin also noted that China's low labor costs simplified the effort to upgrade. He said he had been astounded by the new laboratories at Jiaotong University in Shanghai, which he said could be built in China for $50 a square foot, compared with $500 a square foot at Yale.

Some critics say that the country is trying to achieve excellence in too many areas at once and that the plans of the 30 or so universities selected for heavy state investment duplicate efforts, sacrificing excellence. Even Mr. Levin tempered his enthusiasm with a warning that the "top schools have expanded much too fast and are diluting quality."

In many cases, though, the toughest criticism comes from people who have worked in the system.

"It is important for different universities to have different qualities, just like a symphony," said Yang Fujia, a nuclear physicist and former president of Fudan. "But all Chinese universities want to be comprehensive. Everybody wants to be the piano, having a medical school and lots of graduate students."

Mr. Yang, who leads a small experimental university in Ningbo, also criticized the lack of autonomy given to many Chinese researchers.

"At Princeton one mathematician spent nine years without publishing a paper, and then solved a problem that had been around for 360 years," Mr. Yang said, a reference to Andrew J. Wiles and his solution to Fermat's last theorem in the early 1990's. "No one minded that, because they appreciate the dedication to hard work there. We don't have that spirit yet in China."

Similarly, Ge Jianxiong, a distinguished historical geographer at Fudan, said Chinese culture often demands speedy results, which could undermine research. "In China projects are always short-term, say three years," he said. "Then they want you to produce a book, a voluminous book. In real research you've got to give people the freedom to produce good results, and not just the results they want."

Mr. Ge added that education suffered here because "it has always been regarded as a tool of politics."

Dr. Yao said he had expected to concentrate on creating a world-class Ph.D. program but had found surprising weaknesses in undergraduate training and had decided to teach at that level. "You can't just say I'll only do the cutting-edge stuff," he said. "You've got to teach the basics really well first."

But the biggest weakness, many Chinese academics indicated, is the lack of academic freedom. Mr. Yang, the former president of Fudan University, warned that if the right atmosphere was not cultivated, great thinkers from overseas might come to China for a year or two, only to leave frustrated.

Gong Ke, a vice president of Qinghua University, said universities had "the duty to guarantee academic freedom."

"We have professors who teach here, foreigners, who teach very differently from the Chinese government's point of view," he added. "Some of them really criticize the economic policy of China."

Li Ao, a writer in Taiwan, visited Beijing University in September and gave a speech calling for greater academic freedom and independence from the government. The next day, after reportedly coming under heavy official pressure, he delivered a far tamer version elsewhere. .

The Chinese government also censors university online bulletin boards and discussion groups, and recently prevented students at Zhongshan University in Guangzhou from conversing freely with visiting elected officials from Hong Kong.

Students here are not encouraged to challenge authority or received wisdom. For some, that helps explain why China has never won a Nobel Prize. What is needed most now, some of China's best scholars say, are bold, original thinkers.

"The greatest thing we've done in the last 20 years is lift 200 million people out of poverty," said Dr. Xu. "What China has not realized yet, though, if it truly wants to go to the next level, is to understand that numbers are not enough.

"We need a new revolution to get us away from a culture that prizes becoming government officials. We must learn to reward real innovation, independent thought and genuine scholarly work."

CNPC completes acquisi-tion of PetroKazakhstan

2005-10-27T14:07:00.000+02:00

China National Petroleum Corporation (CNPC) announced Thursday morning it has successfully acquired Canada-based PetroKazakhstan Inc. (PK) through its wholly-owned subsidiary CNPCI.

Wednesday morning, Canadian time, the China's largest oil producer saw its planned acquisition of PK through CNPCI was granted "unconditional" final order by the Queen's Bench Court, Calgary, Canada.

CNPC's bid for PK is 55 US dollars per share, totaling 4.18 billion US dollars, the largest overseas takeover transaction ever made by a Chinese company.

Lukoil of Russia, one of CNPC's major rival in the deal made noappeal, indicating the completion of all legal procedures of the transaction.

To date, the transaction has been completed, announced CNPC.

At local time Wednesday afternoon, Chinese Premier Wen Jiabao met Kazakhstan Prime Minister Danial Akhmetov in Moscow, when attending the Shanghai Cooperation Organization Summit.

Both Premier and the prime minister expressed their strong support for the mutual-benefit cooperation between CNPC and KazMunaiGaz over PK after the completion of the acquisition.

Kazakh Prime Minister promised to help to resolve all remained problems of PK in Kazakhstan together with CNPC after the deal is closed.

Early in the shareholders meeting of PK held last Tuesday, 99.04 percent of all the voting shares were affirmative for the acquisition.

According to relevant transaction procedures, the outcome of the shareholders meeting needs to be sanctioned by the Canadian court.

However, in the court hearing of last Tuesday, the lawyer of Lukoil claimed that the company has the first right of refusal to buy a 50 percent stake in Turgai Petroleum, a joint venture between PK and Lukoil. In this connection, the Court postponed its ruling to Wednesday.

CNPC and PK concluded the negotiation on August 21 over the transaction with the signing of the"Arrangement Agreement".

According to CNPC, after two months of heavy workload, all formal approvals and legal procedures have been obtained and completed. At present, CNPC staff is working with PK and the hand-over of business is under way. Operation of PK is maintained as usual, and employees are unaffected.

PK Inc is an international energy company registered in Canada,with all of its assets, such as oilfields and refineries, in the Republic of Kazakhstan. PK's total annual production capacity of crude oil exceeds seven million tons.

Since its first presence in Kazakhstan in 1997, CNPC has developed good relationship with local government by strictly following local laws and regulations as well as international bestpractices of the industry.

Upon acquisition, in the spirit of win-win and mutual benefit, CNPC will choose to cooperate with KazMunaiGaz, the state oil company of Kazakhstan to operate and manage the PK project, said CNPC.

The two parties signed a memorandum of understanding on Oct. 15,according to which KazMunaiGas will obtain a certain amount of PK shares enough to have strategic control over the development of the country's mineral resources, together with the equal right forjoint management over Shymkent refinery and its products.

PK owns 12 oil fields, and exploration licenses in 6 blocks in Kazakhstan, with great exploration potential.

CNPC said it is confident that taking advantage of CNPC's strength in capital, technology and management, as well as CNPC's valuable experience in Kazakhstan, the production capacity of PK will be increased, and thus provides the Sino-Kazakhstan oil pipeline expected to be completed at the end of this year with a reliable supply.

The increase of investment in Kazakhstan and the acceleration of PK's development will help to ensure the stable supply of oil products of the country and boost local economy, said the company.

Google adds to China team

2005-10-26T17:42:00.000+02:00

Google increased its focus on China by hiring a sales veteran to lead the US Internet search powerhouse's marketing strategy in that country, the AFP reported, citing the company's statement.

Johnny Chou will "establish and lead Google's sales and business development operations in Greater China," the Silicon Valley company said in a written release.

Chou was hired away from UT Starcom, where he was president of that company's China operations for nine years, according to Google.

"The leadership and experience that Johnny Chou brings to Google will be an invaluable asset to Google's plans for developing its business operations in China," said Omid Kordestani, senior vice president of Google's Worldwide Sales and Field Operations.

"Johnny Chou has a proven track record of leading businesses to success in the complex Chinese market and will accelerate our efforts to establish Google's operations in China."

Chou will work with Lee Kaifu, a former Microsoft executive wooed away from the US software giant earlier this year to establish and oversee a Google research center in China, according to Google.

Lee took up his post in China after Microsoft lost a court battle in the United States seeking to block the move.

Lee, a former vice president with Microsoft, was given the green light in September by a judge who said Lee could give Google non-technical advice on doing business in China.

Microsoft had argued Lee was violating confidentiality and non-competition clauses in his employee contract and could damage the company by giving Google access to its corporate secrets.

The judge barred Lee, a computer scientist known for pioneering work in the areas of speech recognition and artificial intelligence, from carrying out work related to computer searches, speech, or languages.

He was also ordered not to disclose any trade secrets he gleaned from Microsoft.

A civil trial that promises to have Google and Microsoft slugging it out in court over Lee is pending.

After arriving in China, Lee said his immediate aim was to recruit 50 college graduates this year, and hire engineers from within the industry.

Lee has been tasked with setting up the US Internet search giant's development centre in China. A decision is expected to be made soon on whether to locate it in Beijing or Shanghai, he said.

Lee and Chou will jointly oversee overall operations at Google's center in China, according to the company.

Chou will lead Google's sales and business development activities while Lee will spearhead Google's public affairs and the creation of the company's research and development center, the company said.

Google has heralded the creation of the centre as a sign of its strong commitment to cultivating Chinese talent as well as its intent to form alliances with universities and institutes.
"The opening of an R and D center in China will strengthen Google's efforts in delivering the best search experience to our users and partners worldwide," Alan Eustace, vice president of engineering at Google, said earlier this year.

U.S. Offers Details of Plan for Open Markets in China

2005-10-19T14:32:00.000+02:00

XIANGHE, China, Oct. 15 - The Bush administration is expected to present China's political leaders on Sunday with a sweeping plan to overhaul China's financial markets and open the country to foreign banks, investment firms and insurance companies.

Administration officials say the plan is part of an effort to put the yuan into a broader debate over China's lopsided reliance on exports as the main source of economic growth.

The plan, to be discussed in two days of talks here and in Beijing, calls for China to speed up the privatization of state-owned companies, including banks; to develop a Chicago-style futures market for currency trading; to establish an independent credit-rating agency; and to crack down on bailouts for banks left holding bad loans.

"What we tried to do is take a quantum leap in sophistication and scope," said Timothy D. Adams, undersecretary for international affairs at the Treasury Department. "It gives you a picture of the truly complex nature of what we are trying to do."

Though many of the ideas are familiar, and often supported by Chinese leaders in principle, the list reflects an increased effort to lecture China about internal financial issues.

That could backfire. Chinese leaders invariably bristle at pressure from American officials, and they could view the new American "priorities" as an unwelcome intrusion.

The new tack comes as Treasury Secretary John W. Snow continues to show little progress on the volatile economic dispute with China over exchange rates.

Republican and Democratic lawmakers in Congress have long complained that the yuan has been pegged at an artificially low value against the dollar, making Chinese exports to the United States cheaper than they would otherwise be.

China announced a 2 percent revaluation in July, but have yet to follow with any additional changes. Based on signals from senior Chinese officials on Friday and Saturday, Mr. Snow is unlikely to return to Washington next week with any evidence of new progress.

Mr. Snow has been arguing that China needs to get people to spend more and save less. Administration officials say that a financial overhaul would help make that happen.

Many economists agree with that assessment, but they caution that there are limits to what the United States can do to speed up change.

"They are doing a smart thing, because the exchange rate is a small part of the overall economic relationship," said Andrew Rothman, a Shanghai-based strategist at CLSA Asia-Pacific, a brokerage firm. But he added, "This is not the kind of thing where someone flips a switch and it happens overnight."

Mr. Rothman said that China had already embraced many of the ideas that Mr. Snow was promoting and that consumer spending has grown sharply in the past few years.

Retail sales in China have been climbing about 10 percent a year for the past several years, he said. Household credit, virtually nonexistent five years ago, now accounts for 16 percent of all outstanding credit.

But many of the Bush administration's proposals would encounter fierce political opposition from many quarters.

China's state-owned banks and far-flung rural credit cooperatives have many defenders in the ruling Communist party, and they are certain to oppose well-financed competition from Western banks.

Even without opposition from vested interests, many Chinese leaders are likely to fret over giving more freedom to foreign financial institutions to enter Chinese markets.

Under current laws, foreign investors are usually prohibited from owning more than 25 percent of a commercial bank, and no single foreign investor can own more than 20 percent.

According to a document that Treasury officials plan to circulate among Chinese leaders, the Bush administration would remove the limits on foreign ownership as well as a host of other restricitons.

Foreign financial institutions that want to buy Chinese securities would be freed from having to have at least $10 billion in assets and to have been in business at least five years.

Foreign-affiliated banks, brokerage firms and insurers would be freed from restrictions on setting up multiple branches at one time.

China issues 1st white paper on democracy

2005-10-19T09:36:00.000+02:00

The Information Office of China's State Council issued Wednesday a white paper on China's political democracy, vowing to actively push forward the reforms of its political system although, it said, tremendous achievements had been scored in this regard.

The white paper, issued by the Information Office of China's State Council, or the cabinet, is the first of its kind in China, giving a detailed account of the inception, development and contents of the socialist political democracy and the principles the country will abide by.

The document, titled Building of Political Democracy in China, also points out the problems the country has to overcome and major steps to be taken in the reforms of its political system.

The socialist political democracy "is the apt choice suited to China's conditions and meeting the requirement of social progress," said the white paper.

Such democracy has enabled the Chinese people, who account for one fifth of the world's population, "to become masters of their own country and society, and enjoy extensive democratic rights, " the white paper says.

In building socialist political democracy, China has always adhered to the basic principle that the Marxist theory of democracy be combined with the reality of China, it says.

In the process, China has also borrowed from the useful achievements of the political civilization of mankind, including Western democracy, and assimilated the democratic elements of fromChina's traditional culture and institutional civilization.

"Therefore, China's socialist political democracy shows distinctive Chinese characteristics," says the white paper.

Such characteristics are as follows:

-- China's democracy is a people's democracy under the leadership of the Communist Party of China (CPC).

-- China's democracy is a democracy in which the overwhelming majority of the people act as masters of State affairs.

-- China's democracy is a democracy guaranteed by the people's democratic dictatorship.

-- China's democracy is a democracy with democratic centralism as the basic organizational principle and mode of operation.

The white paper says the CPC's leading status was established gradually in the protracted struggle and practice of the Chinese people in pursuing national independence, prosperity and a happy life.

"It was a choice made by history and by the people," the document notes.

Over the past 20 years and more, great progress has been made in China's practice in building a socialist democratic political system, the white paper says, providing a list of the achievements.

It points to the fact that the system of the people's congresses, the system of multi-party cooperation and political consultation under the leadership of the CPC, and the system of regional autonomy for ethnic minorities -- all important components of China's democratic system -- have been continuously improved and developed.

The democratic rights of people at the grassroots level in urban and rural areas have been constantly increased, and the citizens' basic rights are respected and guaranteed.

The CPC's capability to rule the country in a democratic manner has been enhanced further, while the government's capability to administer the country in a democratic manner has been strengthened noticeably.

"Major aspects of China's politics, economics, culture and social life are now within the purview of the rule of law," says the white paper.

"Despite the tremendous achievements scored in building a socialist political democracy, the CPC and the Chinese people are clearly aware of the many problems yet to be overcome," the document notes.

The major ones include: the democratic system is not yet perfect; the people's right to manage state and social affairs, economic and cultural undertakings as masters of the country in a socialist market economy are not yet fully realized; laws that have already been enacted are sometimes not fully observed or enforced, and violations of the law sometimes go unpunished.

The white paper also admits that "bureaucracy and corruption still exist and spread in some departments and localities."

It also points out that the mechanism of restraint and supervision over the use of power needs further improvement and the concept of democracy and legal awareness of the whole of Chinese society needs to be further enhanced.

"There is still a long way to go in China's building of political democracy, which will be a historical process of continuous improvement and development," says the white paper.

According to the document, at present, and for a period in the days to come, the CPC and the Chinese government "will actively and steadily push forward the reform of the political system."

They will also stick to and improve the socialist democratic system, strengthen and improve the socialist legal system, reform and improve the methods of leadership and rule of the CPC, reform and improve the government's decision-making mechanism.

The white paper also stresses the importance of the reform of the system of administrative management, the reform of the judicial system, the reform of the cadre and personnel system, and the restraint and supervision over the power.

According to the white paper, China's building of political democracy will abide by the following principles:

-- Upholding the unity of the leadership of the CPC, the people being the masters of the country and ruling the country by law.

-- Giving play to the characteristics and advantages of the socialist system.

-- Being conducive to social stability, economic development and continuous improvement of the people's life.

-- Facilitating the safeguarding of national sovereignty, territorial integrity and state dignity.

-- Being in accord with the objective law of progress step by step and in an orderly way.

The white paper consists of 12 parts, including the people's congress system, the system of ethnic regional autonomy, grassroots democracy in urban and rural areas, and respecting and safeguarding human rights.

China issues guiding proposal for 2006-2010 period

2005-10-19T00:32:00.000+02:00

China Tuesday issued the full text of the proposal that will play a crucial role in shaping the country's development over the next five years.

The document, the Communist Party of China Central Committee's Proposal on the Eleventh Five-year Program on National Economy and Social Development, was adopted at the Fifth Session of the 16th CPC Central Committee which ended last Tuesday.

Divided into ten parts, the proposal provides the basis for drafting the 11th five-year program. It includes fully carrying out the scientific concept of development, coordinating regional development and making China an energy-efficient and environmentally-friendly society.

The first two decades of this century is of great importance in China's development, and the period from 2006 to 2010 is specially crucial, the document said.

In terms of the global environment, the proposal highlights several challenges China will face.

The global economy will develop in a more uneven manner and competition for natural resources, markets, technology and human resources will be stiffer, it said.

Trade protectionism is expected to take new forms, the document said.

domestic problems include the unbalanced development of urban and rural areas, extensive mode of economic growth, irrational economic structure, weak creativity on its own, great difficulty in solving problems relating to agriculture, rural areas and farmers, great employment pressure, among others, according to the document.

China will review the draft of the Eleventh Five-year Program on National Economy and Social Development at the Fourth Session of the Tenth National People's Congress next March.

Shenzhou-VI spacecraft returns home

2005-10-17T15:51:00.000+02:00

The spacecraft, which has orbited the earth for five days, has accomplished planned experiments and accumulated valuable technical data and experiences for the development of China's manned space program since it was launched on Oct. 12, 2005.

China's Shenzhou-6 spacecraft lands safely after successful mission

The re-entry capsule of China's Shenzhou-6 spacecraft, carrying taikonauts Fei Junlong and Nie Haisheng, landed on earth safely at 4:33 a.m. Monday, marking a "complete success" of China's second manned space mission after it put the first Chinese national in space two years ago.

Chinese top legislator Wu Bangguo declared China's second manned space mission a "complete success," claiming it a "milestone" in China's space technology development and its space experiments with human participation.

"The successful mission is of great significance for elevating China's prestige in the world, promoting China's economic, scientific and national defense capabilities and consolidating the national cohesiveness," he said at the Beijing Aerospace Command and Control Center.

Both taikonauts are "in fine conditions," doctors said after physical checkup upon landing. They landed just 1 km away from the preset spot after a 115-hour-and-32-minute spaceflight, which was more than five times that of China's maiden manned spaceflight two years ago.

Fei and Nie stepped down a ladder from the capsule by themselves, and were seated for a bouquet of flowers and to get used to Earth's gravity.

"We feel fine," said all-smile Fei. Nie thanked all the Chinese people for their "concern and support." Both waved flowers to the excited welcoming crowd.

They were later fed with chocolate, Chinese herbal tea. Nie seemed in a very good appetite and took a bowl of instant noodle, before the two men were flown by two Super Puma helicopters to nearby airport where they will head for Beijing by a special plane.

The space mission have gripped the sight of the whole nation in the past five days.

"We can have a final laughter," beaming Liu Yu, commanding chief of the rocket system told Xinhua. "It was a mission perfectly fulfilled."

Television pictures showed parents of the two taikonauts burst into tears when they saw their sons emerging from the spacecraft early Monday morning.

Chinese president Hu Jintao were present at the Beijing Aerospace Command and Control Center to watch the lift-off on Wednesday and talked with taikonauts on Saturday. Chinese premier Wen Jiabao was at the launch site to see off the two men with best wishes before the launch.

Luckily, Nie spent his 41st birthday in space and received a phone call from his wife and daughter. The joyful daughter's sweet song "Happy Birthday to You" has warmed the hearts of millions of Chinese television viewers.

Fei and Nie blasted off Wednesday morning on China's second manned space mission. Before landing, Shenzhou-6 have been racing around the Earth one circle in every 90 minutes 343 km above the Earth at a speed of 7.9 km per second. It flew 3.25 million kilometers in space.

Fei and Nie have conducted a series of unprecedented experiments on the spacecraft, including the maneuvers between the orbital and re-entry capsules, taking on and off space suits, using space toilet and the self-test of blood pressure.

During China's maiden space flight in 2003, lone astronaut Yang Liwei never left his seat in the re-entry capsule nor take off his space suit. That space mission has made China the third country to put human into space following Russia and the United States.

China launches manned space flight

2005-10-12T09:27:00.000+02:00

Two years after China became only the third nation to launch a human into orbit, a pair of astronauts blasted off Wednesday on a longer, riskier mission after receiving a farewell visit from Premier Wen Jiabao.

Wen said the "glorious and sacred mission" would demonstrate China's national confidence and ability.

A rocket carrying the Shenzhou 6 capsule and the astronauts blasted off Wednesday from the remote base in China's northwest. In a break with the space agency's typical secrecy, the launch was shown live on Chinese state television.

The mission, reportedly due to last up to five days, is a key prestige project for China's communist leaders, who have justified the expense of a manned space program by saying that it will drive economic development. It will be more complicated than the first flight in 2003, which carried one astronaut and lasted just 21 1/2 hours.

Minutes after liftoff, mission control announced that the first stage booster had successfully separated from the rocket and that the flight had entered its preset orbit.

The official Xinhua News Agency said the two astronauts, or "taikonauts," will take off their 22-pound spacesuits to travel back and forth between the two halves of their vessel -- a re-entry capsule and an orbiter that will stay aloft after they land.

Earlier in the day, Xinhua announced the identities of the two taikonauts -- Fei Junlong, 40, and Nie Haishen, 41. Previous reports said 14 former fighter pilots were training for the mission.

Images of Fei and Jun in their cockpit as the craft roared toward orbit were broadcast live to hundreds of millions of Chinese television viewers. None of the 2003 space flight was shown live by Chinese television.

"Feeling pretty good," Fei said in the first broadcast comment from the astronauts.

Xinhua said the crew was picked from a field of six finalists. Nie was one of three finalists for the 2003 mission, which made a national hero of Yang Liwei.

The two taikonauts will conduct experiments in orbit, Xinhua said without elaborating.

China, the third nation to put a man into orbit, insisted ahead of the launch that its aspirations in space were strictly peaceful and that it opposes deploying weapons there. Space officials say they hope to land an unmanned probe on the moon by 2010 and launch a space station.

"We do not wish to see any form of weapons in outer space, so we reaffirm that our space flight program is an important element of mankind's peaceful utilization of outer space," Foreign Ministry spokesman Kong Quan said.

International reporters were barred from the launch base. The handful of Chinese journalists allowed to attend the liftoff were warned they might be ordered to hand over any photos or video -- a possible image-control measure in case of an accident.

The Shenzhou -- or Divine Vessel -- capsule is based on Russia's three-seat Soyuz, though with extensive modifications. Spacesuits, life-support systems and other equipment are based on technology purchased from Russia.

But space officials say all equipment launched into orbit is Chinese-made.

China has had a rocketry program since the 1950s and fired its first satellite into orbit in 1970. It regularly launches satellites for foreign clients aboard its giant Long March boosters.

China's development mode to change in "11th Five-Year Plan" period (2006-2010)

2005-10-11T13:56:00.000+02:00

The Fifth Plenary Session of the 16th Central Committee of the Communist Party of China (CPC) that attracted the public's attention was opened in Beijing on the morning of October 8. The meeting will discuss the strategy for China's socio-economic development in the next five years.

Judged from the information disclosed before the opening of the session, China's 11th Five-Year Plan will continue to adhere to the strategic thinking that "development is the absolute principle", at the same time it will lay special emphasis on commanding the overall situation with the "scientific outlook on development".

Analysts hold that the "11th Five-Year (2006-2010) Plan is the first five-year plan formulated after Chinese leaders put forward the scientific outlook on development, which is of a turning-point significance compared with previous five-year plans. For China's socio-economic development for a longer period of time to come, scientific development should also be an "absolute principle".

The Conference of the Political Bureau of the CPC Central Committee held on September 29 stressed the need in the next five years to persist in putting people first, change the concept of development, create a new development mode, improve the quality of development, carry out the "five balances" (balancing urban and rural development, development among regions, economic and social development, development of man and nature, and domestic development and opening to the outside world), and earnestly shift socio-economic development onto the track of all-round coordinated and sustainable development. This indicates that the "11th Five-Year Plan" will be a program for comprehensively implementing the scientific outlook on development.

In August this year, General Secretary Hu Jintao of the CPC Central Committee paid a special visit to the three provinces of Henan, Jiangxi and Hubei for investigation and study, focusing his inspection on issues of enhancing independent innovative capabilities. He emphasized the need to take enhancement of independent innovative capability as the strategic base for scientific and technological development and as the central link in the adjustment of economic structure and transformation of the mode of economic growth, and strive to blaze a trail of scientific and technological innovation with Chinese characteristics.

Zheng Xinli, deputy director of the Central Policy Research Office, points out that as early as during the "Ninth Five-Year Plan" period (1996-2000), China clearly called for a change from an extensive to an intensive mode of economic growth, but so far no breakthrough progress has been made as a whole. The main reason for which is technically due to the lack of independent innovative capability.

Transformation of the mode of economic growth is one of the core contents of China's establishment of a new development modality, it implies: China needs to change from excessive dependence on the input of funds, natural resources and the environment and from the realization of growth through quantitative expansion to more reliance on improving laborers' qualities and technological progress, so as to raise efficiency and achieve economic growth.

The "11th Five-Year Plan" is, of course, the continuation of the first 10 five-year plans, but the coming five years are of utmost importance to the progress of China's future modernization. In the next five years beginning from 2006, whether or not China's socio-economic development can step onto the track of scientific development will determine whether our country can build up a well-off society in an all-round way by 2020 and whether or not it can realize industrialization and modernization by the middle of this century.

From 1978 to 2004, the average annual rate of economic growth of China in reform and opening up to the outside world reached 9.4 percent, China has now become the world's sixth largest economic entity and the third largest trading country. The rising of China has become a hot topic of conversation in today's world.

However, the old road of high input, high consumption and low output that boosted China's economic growth has come to its end. In 2004, China's gross domestic product (GDP) accounted for four percent of the global total, but its consumption of primary energy sources made up 12 percent of the global total, 15 percent freshwater, 25 percent aluminum oxide, 28 percent rolled steel and 50 percent cement.

Wang Mengkui, director of the State Council Development Research Center, said that 85 percent of the world's total population has entered the stage of industrialization one after the other, the sharp contradictions in global population, resources and environment have posed severe challenges to China's modernization. Even if the international market can make up the deficiency of China's resources, it is hard to bear the heavy cost entailed by ecological and environmental damage.

The problem of overheated investment emerged since 2003 has thoroughly laid bare the defects of China's old development mode and has enabled the scientific outlook on development to become a strong consensus of the whole nation.

Reports say that enhancing independent innovative capability, transforming the mode of economic growth, developing a recycling economy and building a resources-conservation and environmental friendly society, and following a new road to industrialization will all become the strategic goal of the "11th Five-Year Plan", what these keywords describe is also China's new pattern of development.

Analysts point out that during the "11th Five-Year Plan" period, the integration of China's economy and the world economy will reach an unprecedented breadth and depth, what development modality China chooses will exert important influence on the world. In this sense, only when China realizes scientific development, is it possible to bring about internal "harmonious development" and external "peaceful development".

Nokia’s China Ambition

2005-10-04T12:29:00.000+02:00

By DAN STEINBOCK

Dr. Dan Steinbock, an expert on dynamic strategy, marketing, and globalization, offers an interesting account on Nokia's activities in China in the Beijing Review, vol. 28, September 29.

Steinbock is a Visiting Virtual Professor at the Department of Management and Organization, and Department of Marketing at the Helsinki School of Economics and Business Administration (HSEBA).

In February, Nokia marked its 20-year presence in China. The Finnish company’s China unit has grown from five employees in 1985 to more than 4,700 employees, focusing on global manufacturing and R&D. This represents more than 8 percent of Nokia’s workforce worldwide.

Finland is a country of 5.2 million inhabitants, and in the recent past, Chinese mobile operators have created as many subscribers on a monthly basis. Last year, Nokia’s net sales in Finland amounted to 351 million euros ($ 431.37 million), which is only about 13 percent of its sales in China.

“In 2004, Nokia not only retained, but clearly extended, its position as the No.1 player in the Chinese mobile device market,” said Jorma Ollila, Nokia Chairman and CEO. “It was also an excellent year for exports. We were again ranked the largest telecom exporter in China, a position held since 2000, with our export sales growing 56 percent year on year in 2004 to reach a record $3.3 billion.”

Last year, Nokia’s net sales in China amounted to almost 2.7 billion euros ($3.32 billion), with assets at 880 million euros ($1.1 billion).

Arduous Journey

When Nokia’s mobile operation began business in China around 1985, it faced a difficult market. As the veteran Nokian, Topi Honkavaara, arrived in Beijing to head the office, aggregate sales were less than $180,000; when he left China in the early 1990s, revenues are said to have amounted to $460 million.

Since China’s reform and opening-up began in the late 1970s, Western technology leaders have traded new technology for market access in China. Until the early 1990s, U.S. players dominated China’s mobile market. After 1989, the Americans reduced their presence or disinvested, providing a strategic opportunity for Nordic players—Nokia and Ericsson.

At about the same time, Nokia embraced its global focus strategy. As a new generation of Nokians arrived in China, the subsidiary began to expand very rapidly.

“In 1995, our annual revenues amounted to $200 million,” said Matti Vesala, chief of Nokia Networks’ production in China in 2000. “In the course of the next three years, these revenues tripled.” Despite Asia’s financial crisis, Nokia increased its investments in China.

“We Finns have always looked for free trade opportunities and tried to secure our access to our main markets,” said Martti Ahtisaari, a highly regarded international diplomat who recently mediated the peace talks between Indonesia and the Aceh rebels. As Finland’s president in 1994-2000, he facilitated the internationalization of Nokia and other Finnish firms by traveling with Finnish industry leaders to new markets. “I figured that if I didn’t help Finnish industrialists, I could not help the workers either,” he added. In China, Ahtisaari introduced Nokia’s chief Jorma Ollila to Chinese leaders.

In October 1998, Ollila visited Beijing to open Nokia’s new R&D center. In the long term, he said, China might well become Nokia’s leading geographic segment.

By then, Nokia had already manufactured half of its Chinese products in China. In Beijing, it was participating in the third generation test network. With access to the Chinese market, its Finnish suppliers, partners and other software firms soon followed suit.

Overseas Growth

In the past few years, Nokia, like other major Finnish multinationals, has grown primarily abroad, triggering some criticism in Finland. In the past, the company was “too Finnish.” In the course of its overseas expansion, it has become locally responsive. That is vital for worldwide success.

Owing to its long-term commitment, Nokia has worked to maximize growth and global competitiveness for all firms in the value chain, which it says has so far contributed to the creation of an estimated 25,000 jobs among its cooperation partners and local sub-contractors and suppliers.

Nokia credits its success in China to its strong brand, leading technology and quality products, and to enhancing the efficiency and reach of the distribution system, particularly in more rural areas.

With ever intensifying competition, Nokia has had to defend its dominance. In 2001, Chinese equipment manufacturers had less than 10 percent of the market; in 2003, this share grew to more than 50 percent! Led by Ningbo Bird and TCL, these challengers exploited the weaknesses of Western leaders, particularly in pricing and distribution.

Although known for its ability to “listen to the market,” particularly in Europe, Nokia fell behind rivals with clamshell phones in China. But it has hired more Chinese employees and learned more about the Chinese market. Last December, it also launched its 3128 clamshell models in China. By 2004, the incumbents—Nokia, Motorola, and Ericsson—reestablished their dominance, basically with their great resources and by mimicking the strategies of Chinese rivals.

Strategically, China is vital for Nokia. As a logistics hub, it plays a major part in Nokia’s global manufacturing base. Of the 15 manufacturing centers, only Finland and China have four each. Nokia deploys Beijing and Dongguan in Guangdong Province for mobile devices. The base station production in China was transferred from Beijing to Suzhou in Jiangsu Province in 2004, while the company continues to manufacture network elements for core and radio networks products in Beijing. Consolidation of base station manufacturing in China enables increased economies of scale, bringing improved operational efficiency and cost benefits.

This year, to meet growing market demand, Nokia plans to add further capacity to its manufacturing facilities in China. As far as Nokia is concerned, there is still much room for expansion in China, where mobile subscriber growth is expected to almost double over the next five years. It is driven by a strong replacement market in urban areas and more and more users in rural China gaining access to mobile communications.

Defining Moment

On August 1, Nokia moved forward with its management succession plan, electrifying the global mobile industry. Nokia’s top leadership will change, but the succession may have little impact on the company’s China strategy. Expect more of the same—and ever-increasing competition.

Ollila will continue as chairman and CEO until June 2006. Many expected Pekka Ala-Pietilä to be Ollila’s successor, but he will resign in February 2006. Olli-Pekka Kallasvuo will be appointed president and COO of Nokia as of October 1 and president and CEO effective June 2006.

As I have written in The Nokia Revolution (2001), Nokia’s mobile success was defined by the difficult strategic decisions following the boardroom shakeup in 1992. It was then that Ollila, as CEO, and Kallasvuo, as CFO, envisioned a new course for the company. They crafted the winning strategy. “We had unhappy Finnish shareholders, unhappy international shareholders. The only thing you could do is to start building a base for very meaningful stock performance,” recalled Ollila.

Ollila and Kallasvuo bet the future of the company on the mobile business while disinvesting everything else. It was a magnificent gamble.

At Nokia, China is seen as a complex operating environment, which is characterized by government influence, the emergence of local standards, regional cooperation with South Korea and Japan, and operators gaining more control of the value chain.

“The opportunities in China comprise robust market growth, 3G in horizon, availability of local talent and resources, and declining trade barriers,” explained David Ho, President of Nokia China. These opportunities are balanced by challenges, such as “domestic competition, stronger multinational competitors and government influence.”

Nokia estimates the total global mobile subscriber base, which hit 1.7 billion at the end of last year, will reach 3 billion by 2010. Of these new subscriptions, nearly one quarter are expected to be in China.

“This represents a tremendous opportunity for Nokia,” said Ollila. “Our aim is to maintain our leading position in China and to continue to grow as the most preferred partner within the Chinese mobile communications industry.”

Chinese Innovation

“We’re moving away from the business of ears to the business of eyes,” said Anssi Vanjoki, Nokia’s multimedia chief as early as in 1998. During the past decades, mobility has been synonymous with voice. Things began to change with “texting” (SMS) in the 1990s. Today, mobility means data communication—new mobile services, including rich voice and data, mobile Internet and intranets/extranets, messaging, personalized content (ultimately, mobile phone television).

In the future, Chinese innovation will play an increasingly important role in the global mobile rivalry. China is no longer important only as a market, but also as an emerging environment for innovation.

In addition to serving as a logistics hub for Nokia, China plays an increasingly important role in the company’s global R&D network. Located in Finland, Nokia Research Center (NRC) is the heart of the company’s R&D operation. It engages in open innovation, through international R&D cooperation and with universities and research institutes worldwide. NRC has two units in Finland (Helsinki and Tampere). These cooperate with four in the United States (Mountain View, San Diego, Dallas and Boston), two in Europe (Bochum and Budapest) and two in Asia-Pacific (Beijing and Tokyo).

At the end of August, Nokia opened a mobile infrastructure R&D center in Chengdu, capital city of Sichuan Province in west China. It is the company’s sixth R&D unit and the second 3G R&D center in China. It will develop mobile applications based on 3G and IP Multimedia Subsystem for both Chinese and global markets.

“Nokia is delighted to establish a new R&D center in this part of China,” said President Ho of Nokia China. “This marks another important step forward for Nokia in implementing its localization strategy.”

Nokia is committed to long-term development in China. Along with its rivals, it is also preparing for the Beijing Summer Olympics in 2008.

”Until the 1970s, Nokia was a Finnish company, in the 1980s Nokia was a Nordic company and in the beginning of the 1990s a European company,” said Ollila. ”Now, we are a global company.”

“During the next three years, I would not be surprised to see China become Nokia’s largest market in net sales terms,” Ollila announced last spring.

China, clearly, is critical to Nokia.

Outsourcing Innovation

2005-10-02T07:49:00.000+02:00

First came manufacturing. Now companies are farming out R&D to cut costs and get new products to market faster. Are they going too far?

As the Mediterranean sun bathed the festive cafés and shops of the Côte d'Azur town of Cannes, banners with the logos of Motorola (MOT ), Royal Philips Electronics (PHG ), palmOne (PLMO ), and Samsung fluttered from the masts of plush yachts moored in the harbor. On board, top execs hosted nonstop sales meetings during the day and champagne dinners at night to push their latest wireless gadgets. Outside the city's convention hall, carnival barkers, clowns on stilts, and vivacious models with bright red wigs lured passersby into flashy exhibits. For anyone in the telecom industry wanting to shout their achievements to the world, there was no more glamorous spot than the sprawling 3GSM World Congress in Southern France in February. Advertisement

Yet many of the most intriguing product launches in Cannes took place far from the limelight. HTC Corp., a red-hot developer of multimedia handsets, didn't even have its own booth. Instead, the Taiwanese company showed off its latest wireless devices alongside partners that sell HTC's models under their own brand names. Flextronics Corp. demonstrated several concept phones exclusively behind closed doors. And Cellon International rented a discrete three-room apartment across from the convention center to unveil its new devices to a steady stream of telecom executives. The new offerings included the C8000, featuring eye-popping software. Cradle the device to your ear and it goes into telephone mode. Peer through the viewfinder and it automatically shifts into camera mode. Hold the end of the device to your eye and it morphs into a videocam.

HTC? Flextronics? Cellon? There's a good reason these are hardly household names. The multimedia devices produced from their prototypes will end up on retail shelves under the brands of companies that don't want you to know who designs their products. Yet these and other little-known companies, with names such as Quanta Computer, Premier Imaging, Wipro Technologies (WIT ), and Compal Electronics, are fast emerging as hidden powers of the technology industry.

They are the vanguard of the next step in outsourcing -- of innovation itself. When Western corporations began selling their factories and farming out manufacturing in the '80s and '90s to boost efficiency and focus their energies, most insisted all the important research and development would remain in-house.

But that pledge is now passé. Today, the likes of Dell (DELL ), Motorola, (MOT ) and Philips are buying complete designs of some digital devices from Asian developers, tweaking them to their own specifications, and slapping on their own brand names. It's not just cell phones. Asian contract manufacturers and independent design houses have become forces in nearly every tech device, from laptops and high-definition TVs to MP3 music players and digital cameras. "Customers used to participate in design two or three years back," says Jack Hsieh, vice-president for finance at Taiwan's Premier Imaging Technology Corp., a major supplier of digital cameras to leading U.S. and Japanese brands. "But starting last year, many just take our product. Because of price competition, they have to."

While the electronics sector is furthest down this road, the search for offshore help with innovation is spreading to nearly every corner of the economy. On Feb. 8, Boeing Co. (BA ) said it is working with India's HCL Technologies to co-develop software for everything from the navigation systems and landing gear to the cockpit controls for its upcoming 7E7 Dreamliner jet. Pharmaceutical giants such as GlaxoSmithKline (GSK ) and Eli Lilly (LLY )are teaming up with Asian biotech research companies in a bid to cut the average $500 million cost of bringing a new drug to market. And Procter & Gamble Co. (PG ) says it wants half of its new product ideas to be generated from outside by 2010, compared with 20% now.

Competitive Dangers
Underlying this trend is a growing consensus that more innovation is vital -- but that current R&D spending isn't yielding enough bang for the buck. After spending years squeezing costs out of the factory floor, back office, and warehouse, CEOs are asking tough questions about their once-cloistered R&D operations: Why are so few hit products making it out of the labs into the market? How many of those pricey engineers are really creating game-changing products or technology breakthroughs? "R&D is the biggest single remaining controllable expense to work on," says Allen J. Delattre, head of Accenture Ltd.'s (ACN ) high-tech consulting practice. "Companies either will have to cut costs or increase R&D productivity."

The result is a rethinking of the structure of the modern corporation. What, specifically, has to be done in-house anymore? At a minimum, most leading Western companies are turning toward a new model of innovation, one that employs global networks of partners. These can include U.S. chipmakers, Taiwanese engineers, Indian software developers, and Chinese factories. IBM (IBM ) is even offering the smarts of its famed research labs and a new global team of 1,200 engineers to help customers develop future products using next-generation technologies. When the whole chain works in sync, there can be a dramatic leap in the speed and efficiency of product development.

The downside of getting the balance wrong, however, can be steep. Start with the danger of fostering new competitors. Motorola hired Taiwan's BenQ Corp. to design and manufacture millions of mobile phones. But then BenQ began selling phones last year in the prized China market under its own brand. That prompted Motorola to pull its contract. Another risk is that brand-name companies will lose the incentive to keep investing in new technology. "It is a slippery slope," says Boston Consulting Group Senior Vice-President Jim Andrew. "If the innovation starts residing in the suppliers, you could incrementalize yourself to the point where there isn't much left."

Such perceptions are a big reason even companies that outsource heavily refuse to discuss what hardware designs they buy from whom and impose strict confidentiality on suppliers. "It is still taboo to talk openly about outsourced design," says Forrester Research Inc. (FORR ) consultant Navi Radjou, an expert on corporate innovation.

The concerns also explain why different companies are adopting widely varying approaches to this new paradigm. Dell, for example, does little of its own design for notebook PCs, digital TVs, or other products. Hewlett-Packard Co. (HPQ ) says it contributes key technology and at least some design input to all its products but relies on outside partners to co-develop everything from servers to printers. Motorola buys complete designs for its cheapest phones but controls all of the development of high-end handsets like its hot-selling Razr. The key, execs say, is to guard some sustainable competitive advantage, whether it's control over the latest technologies, the look and feel of new products, or the customer relationship. "You have to draw a line," says Motorola CEO Edward J. Zander. At Motorola, "core intellectual property is above it, and commodity technology is below."

Wherever companies draw the line, there's no question that the demarcation between mission-critical R&D and commodity work is sliding year by year. The implications for the global economy are immense. Countries such as India and China, where wages remain low and new engineering graduates are abundant, likely will continue to be the biggest gainers in tech employment and become increasingly important suppliers of intellectual property. Some analysts even see a new global division of labor emerging: The rich West will focus on the highest levels of product creation, and all the jobs of turning concepts into actual products or services can be shipped out. Consultant Daniel H. Pink, author of the new book A Whole New Mind, argues that the "left brain" intellectual tasks that "are routine, computer-like, and can be boiled down to a spec sheet are migrating to where it is cheaper, thanks to Asia's rising economies and the miracle of cyberspace." The U.S. will remain strong in "right brain" work that entails "artistry, creativity, and empathy with the customer that requires being physically close to the market."

You can see this great divide already taking shape in global electronics. The process started in the 1990s when Taiwan emerged as the capital of PC design, largely because the critical technology was standardized, on Microsoft Corp.'s (MSFT ) operating system software and Intel Corp.'s (INTC ) microprocessor. Today, Taiwanese "original-design manufacturers" (ODMS), so named because they both design and assemble products for others, supply some 65% of the world's notebook PCs. Quanta Computer Inc. alone expects to churn out 16 million notebook PCs this year in 50 different models for buyers that include Dell, Apple Computer (AAPL ), and Sony (SNE ).

Now, Taiwanese ODMs and other outside designers are forces in nearly every digital device on the market. Of the 700 million mobile phones expected to be sold worldwide this year, up to 20% will be the work of ODMs, estimates senior analyst Adam Pick of the El Segundo (Calif.) market research firm iSuppli Corp. About 30% of digital cameras are produced by ODMs, 65% of MP3 players, and roughly 70% of personal digital assistants (PDAs). Building on their experience with PCs, they're increasingly creating recipes for their own gizmos, blending the latest advances in custom chips, specialized software, and state-of-the-art digital components. "There is a lot of great capability that has grown in Asia to develop complete products," says Doug Rasor, worldwide strategic marketing manager at chipmaker Texas Instruments Inc. TI often supplies core chips, along with rudimentary designs, and the ODMs take it from there. "They can do the system integration, the plastics, the industrial design, and the low-cost manufacturing, and they are happy to put Dell's name on it. That is a megatrend in the industry," says Rasor.

Taiwan's ODMs clearly don't regard themselves as mere job shops. Just ask the top brass at HTC, which creates and manufactures smart phones for such wireless service providers as Vodafone and Cingular as well as equipment makers it doesn't identify. "We know this kind of product category a lot better than our customers do," says HTC President Peter Chou. "We have the capability to integrate all the latest technologies. We do everything except the Microsoft operating system."

Or stop in to Quanta's headquarters in the Huaya Technology Park outside Taipei. Workers are finishing a dazzling structure the size of several football fields, with a series of wide steps leading past white columns supporting a towering Teflon-and-glass canopy. It will serve as Quanta's R&D headquarters, with thousands of engineers working on next-generation displays, digital home networking appliances, and multimedia players. This year, Quanta is doubling its engineering staff, to 7,000, and its R&D spending, to $200 million.

Why? To improve its shrinking profit margins -- and because foreign clients are demanding it. "What has changed is that more customers need us to design the whole product," says Chairman Barry Lam. For future products, in fact, "it's now difficult to get good ideas from our customers. We have to innovate ourselves."

Sweeping Overhaul
India is emerging as a heavyweight in design, too. The top players in making the country world-class in software development, including HCL and Wipro, are expected to help India boost its contract R&D revenues from $1 billion a year now to $8 billion in three years. One of Wipro's many labs is in a modest office off dusty, congested Hosur Road in Bangalore. There, 1,000 young engineers partitioned into brightly lit pods jammed with circuit boards, chips, and steel housings hunch over 26 development projects. Among them is a hands-free telephone system that attaches to the visor of a European sports car. At another pod, designers tinker with a full dashboard embedded with a satellite navigation system. Inside other Wipro labs in Bangalore, engineers are designing prototypes for everything from high-definition TVs to satellite set-top boxes.

Perhaps the most ambitious new entrant in design is Flextronics. The manufacturing behemoth already builds networking gear, printers, game consoles, and other hardware for the likes of Nortel Networks (NT ), Xerox (XRX ), HP, Motorola, and Casio Computer. But three years ago, it started losing big cell-phone and PDA orders to Taiwanese ODMs. Since then, CEO Michael E. Marks has shelled out more than $800 million on acquisitions to build a 7,000-engineer force of software, chip, telecom, and mechanical designers scattered from India and Singapore to France and Ukraine. Marks's splashiest move was to pay an estimated $30 million for frog design Inc., the pioneering Sunnyvale (Calif.) firm that helped design such Information Age icons as Apple Computer Inc.'s original Mac in 1984. So far, Flextronics has developed its own basic platforms for cell phones, routers, digital cameras, and imaging devices. His goal is to make Flextronics a low-cost, soup-to-nuts developer of consumer-electronics and tech gear.

Marks has an especially radical take on where all this is headed: He believes Western tech conglomerates are on the cusp of a sweeping overhaul of R&D that will rival the offshore shift of manufacturing. In the 1990s, companies like Flextronics "completely restructured the world's electronics manufacturing," says Marks. "Now we will completely restructure design." When you get down to it, he argues, some 80% of engineers in product development do tasks that can easily be outsourced -- like translating prototypes into workable designs, upgrading mature products, testing quality, writing user manuals, and qualifying parts vendors. What's more, most of the core technologies in today's digital gadgets are available to anyone. And circuit boards for everything from cameras to network switches are becoming simpler because more functions are embedded on semiconductors. The "really hard technology work" is migrating to chipmakers such as Texas Instruments, Qualcomm (QCOM ), Philips, Intel, and Broadcom (BRCM ), Marks says. "All electronics are on the same trajectory of becoming silicon surrounded by plastic."

Why then, Marks asks, should Nokia (NOK ), Motorola, Sony-Ericsson, Alcatel (ALA ), Siemens (SI ), Samsung, and other brand-name companies all largely duplicate one another's efforts? Why should each spend $30 million to develop a new smartphone or $200 million on a cellular base station when they can just buy the hardware designs? The ultimate result, he says: Some electronics giants will shrink their R&D forces from several thousand to a few hundred, concentrating on proprietary architecture, setting key specifications, and managing global R&D teams. "There is no doubt the product companies are going to have fewer people design stuff," Marks predicts. "It's going to get ugly."

Granted, Marks's vision is more than a tad extreme. True, despite the tech recovery, many corporate R&D budgets have been tightening. HP's R&D spending long hovered around 6% of sales, but it's down to 4.4% now. Cisco Systems' (CSCO ) R&D budget has dropped from its old average of 17% to 14.5%. The numbers also are falling at Motorola, Lucent Technologies (LU ), and Ericsson. In November, Nokia Corp. said it aims to trim R&D spending from 12.8% of sales in 2004 to under 10% by the end of 2006.

Close to the Heart
Still, most companies insist they will continue to do most of the critical design work -- and have no plans to take a meat ax to R&D. A Motorola spokesman says it plans to keep R&D spending at around 10% for the long term. Lucent says its R&D staff should remain at about 9,000, after several years of deep cuts. And while many Western companies are downsizing at home, they are boosting hiring at their own labs in India, China, and Eastern Europe. "Companies realize if they want a sustainable competitive advantage, they will not get it from outsourcing," says President Frank M. Armbrecht of the Industrial Research Institute, which tracks corporate R&D spending.

Companies also worry about the message they send investors. Outsourcing manufacturing, tech support, and back-office work makes clear financial sense. But ownership of design strikes close to the heart of a corporation's intrinsic value. If a company depends on outsiders for design, investors might ask, how much intellectual property does it really own, and how much of the profit from a hit product flows back into its own coffers, rather than being paid out in licensing fees? That's one reason Apple Computer lets the world know it develops its hit products in-house, to the point of etching "Designed by Apple in California" on the back of each iPod.

Yet some outsourcing holdouts are changing their tune. Nokia long prided itself on developing almost everything itself -- to the point of designing its own chips. No longer. Given the complexities of today's technologies and supply chains, "nobody can master it all," says Chief Technology Officer Pertti Korhonen. "You have to figure out what is core and what is context." Lucent says outsourcing some development makes sense so that its engineers can concentrate on next-generation technologies. "This frees up talent to work on new product lines," says Dave Ayers, vice-president for platforms and engineering. "Outsourcing isn't about moving jobs. It's about the flexibility to put resources in the right places at the right time."

It's also about brutal economics and the relentless demands of consumers. To get shelf space at a Best Buy (BBY ) or Circuit City often means brand-name companies need a full range of models, from a $100 point-and-shoot digital camera with 2 megapixels, say, to a $700 8-megapixel model that doubles as a videocam and is equipped with a powerful zoom lens. On top of this, superheated competition can reduce hit products to cheap commodities within months. So they must get out the door fast to earn a decent margin. "Consumer electronics have become almost like produce," says Michael E. Fawkes, senior vice-president of HP's Imaging Products Div. "They always have to be fresh."

Such pressures explain outsourcing's growing allure. Take cell phones, which are becoming akin to fashion items. Using a predesigned platform can shave 70% of development costs off a new model, estimates William S. Wong, a senior vice-president for marketing at Cellon. That can be a huge savings. As a rule of thumb, it takes around $10 million and up to 150 engineers to develop a new cell phone from scratch. If Motorola or Nokia guess wrong about the market trends a year into the future, they can lose big. So they must develop several versions.

With most of its 800 engineers in China and France, Cellon creates several basic designs each year and spreads the costs among many buyers. It also has the technical expertise to morph that basic phone into a bewildering array of models. Want a 2-megapixel camera module instead of 1-megapixel? Want to include a music player, or change the style from a gray clamshell to a flaming-red candy-bar shape? No problem: Cellon engineers can whip up a prototype, run all the tests, and get it into mass production in a Chinese factory in months.

Moving Up the Food Chain
Companies are still figuring out exactly what to outsource. PalmOne Inc.'s collaboration with Taiwan's HTC on its popular Treo 650 smart phone illustrates one approach. Palm has long hired contractors to assemble hardware from its own industrial designs. But in 2001, it decided to focus on software and shifted hardware production to Taiwanese ODMs. PalmOne designers still determine the look and feel of the product, pick key components like the display and core chips, and specify performance requirements. But HTC does much of the mechanical and electrical design. "Without a doubt, they've become a part of the innovation process," says Angel L. Mendez, senior global operations vice-president at palmOne. "It's less about outsourcing and more about the collaborative way in which design comes together." The result: PalmOne has cut months off of development times, reduced defects by 50%, and boosted gross margins by around 20%.

Hewlett-Packard, a company with such a proud history of innovation that its advertising tag line is simply "invent," also works with design partners on all the hardware it outsources. "Our strategy is now to work with global networks to leverage the best technologies on the planet," says Dick Conrad, HP's senior vice-president for global operations. According to iSuppli, HP is getting design help from Taiwan's Quanta and Hon Hai Precision for PCs, Lite-On for printers, Inventec for servers and MP3 players, and Altek for digital cameras. HP won't identify specific suppliers, but it says the strategy has brought benefits. Conrad says it now takes 60% less time to get a new concept to market. Plus, the company can "redeploy our assets and resources to higher value-added products" such as advanced printer inks and sophisticated corporate software, he says.

How far can outsourced design go? When does it get to the point where ODMs start driving truly breakthrough concepts and core technologies? It's not here yet. Distance is one barrier. "To be a successful product company requires intimacy with the customer," says Azim H. Premji, chairman of India's Wipro. "That is very hard to offshore in fast-changing markets." Another hurdle is that R&D spending by ODMs remains relatively low. Even though Premier develops most of its own cameras and video projectors, "the really core technology," such as the digital signal processors, is invented in the U.S., says vice-president Hsieh. Premier's latest wallet-size video projector, for example, was based on a rough design by Texas Instruments, developer of the core chip. With margins shrinking fast in the ODM business, however, Premier and other Taiwanese companies know they need to move up the innovation food chain to reap higher profits.

That's where Flextronics and its design acquisitions could get interesting. Inside frog's hip Sunnyvale office, designers are working to create a radically new multimedia device, for an unnamed corporate client, that won't hit the market until 2007. The plan, says Patricia Roller, frog's co-CEO, is to use Flextronics software engineers in Ukraine or India to develop innovative applications, and for Flextronics engineers to design the working prototype. Flextronics then would mass-produce the gadgets, probably in China.

Who will ultimately profit most from the outsourcing of innovation isn't clear. The early evidence suggests that today's Western titans can remain leaders by orchestrating global innovation networks. Yet if they lose their technology edge and their touch with customers, they could be tomorrow's great shrinking conglomerates. Contractors like Quanta and Flextronics that are moving up the innovation ladder, meanwhile, have a shot at joining the world's leading industrial players. What is clear is that an army of in-house engineers no longer means a company can control its fate. Instead, the winners will be those most adept at marshaling the creativity and skills of workers around the world.

US warns of possible terror in China's northwest

2005-10-01T17:38:00.000+02:00

The United States has warned American travellers to be vigilant against a terrorist attack in China's restive northwestern region of Xinjiang after Beijing told police there to be prepared for danger.

The call came ahead of the 50th anniversary on Saturday of the establishment of Xinjiang as an autonomous region.

Muslim Uighur militants, whom Beijing calls terrorists or separatists, have been struggling for decades to make the remote region, formally established on October 1, 1955, an independent state called East Turkestan.

"Americans considering travel to the region and those already there should review their plans carefully, remain vigilant with regard to their personal security and exercise caution," a message e-mailed from the U.S. embassy in China said.

"Terrorists do not distinguish between official and civilian targets. Americans in remote areas or border regions where military or police authority is limited or non-existent could also become targets."

Chinese security chief Luo Gan had urged law enforcement officers and armed police in Xinjiang to crack down on criminals to create a "safer environment for economic growth and social progress," the China Daily newspaper said on Thursday.

Luo, a Politburo Standing Committee member, also said officials at all levels should be "prepared for danger in times of safety" and "keep a clear mind."

The Public Security Ministry said earlier this month that more than 260 terrorist acts had been committed in Xinjiang in the past two decades, killing 160 and wounding 440. It labeled East Turkestan forces the main terrorist threat to China.

Majority-Muslim Xinjiang is home to nearly 20 million people, more than 60 per cent of them considered ethnic minorities in predominantly Han China.

Wang Lequan, the Communist Party secretary of Xinjiang, said last month that Rebiya Kadeer, a minority Uighur businesswoman freed in March after years in jail and exiled to the United States, was plotting to sabotage the anniversary celebrations in Xinjiang, which lies to the north of Tibet.

Kadeer, jailed in 1999 on charges of providing state secrets abroad, was released on medical parole.

1st October----China national day

2005-09-30T20:36:00.000+02:00

China had an party to celebrate the 56th anniversary of ‘new China’ Friday evening in Beijing.

Chinese Premier Wen Jiabao said here on Friday that China will work for building "a new world of peace, amity and harmony" together with the people throughout the world.

Wen made the remarks at a reception marking the 56th anniversary of the founding of the People's Republic of China held in the Great Hall of the People in downtown Beijing.

About 1,000 Chinese and foreign diplomats, scholars and people from all walks of life were present at the reception.

In fact, Chinese leaders and senior officials over the past few months have kept highlighting the new feature of the country's foreign policy: "peace, development and cooperation".

In an article issued in August, Chinese Foreign Minister Li Zhaoxing said that seeking peace, amity and harmony among all countries is a key component of Chinese traditional culture. Under the banner of peace, development and cooperation, the country's diplomacy has kept forging ahead and contributed to safeguarding world peace and promoting common development.

In Asia, China helped its surrounding countries deal with the financial crisis in 1997 and offered the country's largest-ever aid to the tsunami-hit countries in January this year.

China also initiated the Shanghai Cooperation Organization for regional security and economic cooperation and promoted cooperation between China, Japan, the Republic of Korea and the Association of Southeast Asian Nations.

All the facts proved that China is a good neighbor, good friend and good partner of its neighboring countries , Li said.

On the international arena, China has pushed for South-South cooperation and North-South cooperation, explored new areas and channels of mutually beneficial cooperation with developing countries and provided them with assistance within its ability.

Meanwhile, China has forged partnership with the world's major powers, and made common efforts to promote world peace and prosperity.

Besides, China has actively taken part in the United Nations affairs and carried out international cooperation on anti-terrorism, arms control, peace-keeping, development, human rights, law enforcement and environmental protection.

Li Junru, a well-known theorist in the Party, said that China is late in the progress of modernization and industrialization.

"However, we will not repeat the past bitter history of turbulence and instability in the world resulted from the rise of a big power, but seek a road that a new rising nation has never taken," Li said.

Chinese President Hu Jintao told a UN summit meeting in New York earlier this month that China will resolutely insist on the road of peaceful development, the independent foreign policy of peace and develop friendly relations and cooperation with various countries on the basis of the Five Principles of Peaceful Coexistence. Enditem

Premier pledges to build harmonious, well off society

Finland: E-Services Change Health Care for the Good of the Customer

2005-09-29T13:16:00.000+02:00

The Finnish National Fund for Research and Development Sitra’s Health Care Programme brought together the key persons of Finnish Health care to its seminar Challenges for the future: Digitalisation of health care in Helsinki on 28 September 2005. The purpose of the seminar was to provide new information on the opportunities presented by digitalisation in health care. The speakers at the seminar consisted of Finnish and foreign experts who shared their experiences and views on the development of health care.

Liisä Hyssälä, Minister of Health and Social Services, introduced the Finnish strategy. The objective is that Finland would, in the next few years, have implemented an electronic archive system for health care and a national electronic health record system. Legislation will also be amended to correspond to these changes.

“Implementing the strategy requires, however, confidence between the different parties, co-operation and commitment to common goals,” said Hyssälä.

The development and implementation of a national electronic health record system is an enormous step for Finland.

“Health records and results stored in one place will enable a completely new standard for analysing care and its results,” said Hannu Hanhijärvi, Executive Director of Sitra’s Health Care Programme. “It will facilitate a consistent long-term development of care processes.”

The introduction of e-Services is still in its early stages in Finland. For experiences of large-scale information systems Finland has to look to other countries. Examples of good practices were learnt, for example, from the USA, where private health care providers have launched extensive projects in the field.

The California-based Kaiser Permanente has invested $ 2 billion in the digitalisation of their health care systems. It has a huge customer base when compared to Finland: over 8 million people. The company is the largest health care provider in the region and once the system has been completed, it will be one of the most advanced in the world.

“Our primary aim is to improve our operations and customer service although we naturally also wish to increase the profitability of our operations,” said Dr Andrew M. Wiesenthal.

Information technology can be applied in health care in a more versatile manner than at present. “The technology already exists. The challenge is to make organisational and operative changes to introduce innovations. Ultimately, the changes are made to serve the citizens,” said Esko Aho, President of Sitra.

The seminar was recorded on video and viewable on Sitra

"Chinese Google" in court again

2005-09-27T16:46:00.000+02:00

Seven music companies and Baidu, China's largest Internet search engine, agreed to attempt mediation yesterday on the first day of an eye-catching copyright trial.

Four music giants are suing Baidu, dubbed "the Chinese Google," for infringing the copyright of 137 songs and are seeking 1.67 million yuan (US$206,000).

The companies Universal, EMI, Warner, Sony BMG and their local subsidiaries, Cinepoly, Go East and Gold Label and Baidu said, however, that the judge will resolve the case if no agreement can be reached.

The two parties reached no agreements during a five-and-a-half-hour hearing at Beijing No 1 Intermediate People's Court. It was the second time NASDAQ-listed Baidu has been in court this month. On September 16, the People's Court of Haidian District in Beijing ordered Baidu to pay 68,000 yuan (US$8,400) to mainland music company Shanghai Busheng Music Culture Media for unauthorized downloads of 46 songs. Baidu has appealed.

The two suits against Baidu are the world's first targeting MP3 downloads from a search engine.

Analysts say what the music companies most want is the suspension of the service that allows Internet users free access to copyright material. Some believe that the suits might herald the end of free MP3 downloads in China, which are popular with youngsters.

At yesterday's hearing, the plaintiffs claimed Baidu has made it easy for users to download illegal copies of their songs.

The companies alleged they had never entrusted Baidu to make the 137 songs available on the Internet, and asked Baidu to immediately stop providing online displays and download services for these songs.

At present, Internet users may use Baidu's search engine to locate copies of music stored on the web. When a user clicks on a particular song, the engine provides a direct link to the site where the file is stored.

Baidu defended itself as a neutral search engine that is simply providing the basic service offered by all engines. Baidu said that it does not upload songs itself, nor does it provide online displays or download services to its users.

Furthermore, Baidu insisted it has always advocated improving copyright protection on the Internet and promises to provide relief and protection if a company can prove it owns the right to a song.

Baidu said it was willing to work with music companies to explore new business models to provide a legal platform for music searches.

Recently, Netease, one of the top three web portals in China, shut down its MP3 search function over similar concerns. Most of Netease's income, however, comes from online gambling.
For Baidu, however, MP3 searches are a core business, which contributes 22 per cent of its online traffic. The songs cited in the suits represent only a small part of the songs that are available through Baidu's MP3 searches.

Lee starts job as boss of Google in China

2005-09-27T16:33:00.000+02:00

Kaifu Lee, a target in the on-going fight between Microsoft and Google, has taken up his post as Google's head in China with the aim of recruiting 50 college graduates this year.

Lee, former vice-president with the US software giant Microsoft, said yesterday in Beijing, "We have a lot of expectations for our Chinese operations and the Chinese market."

Speaking after he received permission to work for the search engine in China, he said that Google's development centre in China will be established very soon.

Google has been deciding where to put the centre between Beijing and Shanghai. Lee said his company will make a decision soon.

It already has a representative office in Shanghai and has signed deals with several advertisement agents, preparing for the formal launch of its business in China.

The search giant plans to build a world-class centre in China, which will not only work on the localization of its products and services, but also on cutting-edge technologies for its global operations.

The top Chinese scientist at Google said his job is to hire at least 50 college graduates by the end of this year, as the job-hunting season for graduate students starts this month.

"We are here not to steal talent from other companies, but train local people," he said.

Lee, who enjoys a high reputation among Chinese students for his success in companies including Microsoft and Apple, promised he would lead the 50 new students personally and make them into top-class computer scientists.

He added that since the graduates can only begin work after their graduation in the middle of next year, his firm will also try to recruit engineers from within the industry.

Microsoft Research Asia, which was founded by Lee in 1998 in Beijing, also said yesterday it would aim to recruit 100 to 150 graduates this year.

Although the Chinese scientist received permission to work for Google from a US local court, he was not allowed to work on any projects similar to ones he had worked on at Microsoft.

The world's largest software firm sued Lee and Google for the breach of a non-compete agreement between Microsoft and Lee in July and demanded the court stop Lee from working at Google for one year following his departure from Microsoft.

The court gave Lee the green light to work at Google, but it still needs to rule in January on what jobs Lee can work on at Google so currently his main job is to find employees for his new firm in China.

China opens hearing on income tax threshold

2005-09-27T16:24:00.000+02:00

China's top legislature held its first-ever legislative hearing on Tuesday, aiming to enhance legislative transparency and to promote democracy in legislation.

The hearing is on lifting the cutoff point of the personal income tax from 800 yuan (98.8 US dollars) to 1,500 yuan (185 US dollars), a major move for amendment to the Law on Personal Income Tax.

Some 40 people from various walks of life and various regions across the country, selected from nearly 5,000 applicants, attended the hearing, with 20 as speakers of the general public.

Their opinions will provide an "important basis" for the Standing Committee of the National People's Congress (NPC), the top legislature, to make amendments to the personal income tax law.

The cutoff point, the first in more than 20 years, is to be raised to meet the rising wage level, cost of living and inflation.

"A major principle is to ensure the threshold of income tax payment will not affect the people's life as they have to pay more for housing and education, medical services," said a high-ranking taxation official.

During the morning session, 16 representatives from various social sectors voiced their opinions. Representatives from government departments and provinces were also given eight minutes each for an individual speech.

A survey of the 20 speakers conducted before the hearing shows 85 percent of them favor raising the personal income tax threshold above 1,500 yuan.

Yang Jingyu, chairman of the NPC Law Committee, said that the adjustment of the threshold has aroused great concern among the general public.

By holding the first-ever public hearing for such an important legislation, "we are collecting the wisdom and proposals of people from all walks of life."

"It is also a major step to increase legislative transparency and democracy," Yang said.

China put in force a law on legislation on July 1, 2000, which says the standing committees of people's congresses should solicit opinions from various sides on making laws and regulations. The opinion-collecting process may take various forms, including symposiums, debate sessions or hearings.

By the end of 2004, 24 provincial legislative bodies had held 38 legislative hearings on regional draft laws and regulations concerning market administration, protection of consumers' rights,the environment and resources, construction of urban utilities andother major issues of public concern.
According to Peng Zhenqiu, a deputy to the NPC, all the opinions raised in these hearings were well considered when the provincial lawmakers formulated the local laws and regulations.

How can energy shortage be blamed on China

2005-09-24T20:06:00.000+02:00

China's energy production and consumption has become the focus of world attention. In 2004, China's net crude oil import was 117 million tons, accounting for 6.31 percent of the volume traded worldwide. China supplies 94 percent of the energy it needs and is only six percent dependent on overseas market.

Per capita primary energy consumption in China is 1.08 tons oil equivalent, about 66 percent of world average, which stands at 1.63 tons, 13.4 percent of America's 8.02 tons, 26.7 percent of Japan's 4.03 tons and 28.1 percent of Britain's 3.82 tons. China has a per capita installed capacity of 0.3 kilowatt, about 10 percent of America's three kilowatt. China's crude oil import makes up 6.31 percent of world trade and is 23 percent of America's import and 56 percent of Japan's.

Some people attribute the hike of international oil prices in 2004 to the growth of crude oil consumption in emerging countries like China and India. This opinion fails to truly reflect the situation of international energy markets.

China is a developing country. Its basic principle of energy development is to rely on domestic resources and make prioritizing saving and efficiency the prime task of its energy policy. China issued the Law on Conservation of Energy in 1997. From 1978 to 2004 China's 4.8 percent average annual growth of energy consumption sustained a 9.4 percent average annual economic growth. From 1990 to 2004, energy consumption for every ten thousand yuan of GDP in China has decreased by 45 percent.

China's energy consumption dependence on other countries is rather small and the world has no reason to overreact over China's energy consumption growth. Meanwhile the international community should respect China's right to development and the Chinese people's desire for getting rid of poverty and living a well-off civilized life. The development of China's economy and energy also brings great business opportunity to the world and becomes a driving force of world economy.

In light of the Eleventh Five-Year Plan, China has studied out a medium and long-term plan for energy development. The plan can be summarized as: prioritizing energy saving with efficiency as foundation; diversified development with coal as basis; relying on domestic resources while exploring overseas; integrated planning of urban and rural areas as a whole and rationalizing structure; relying on science and technology and exploring new system; protecting environment and ensuring security. The medium and long-term plan stresses adjusting energy structure, accelerating development of nuclear power, renewable energies and vigorously developing hydropower.

The National People's Congress has adopted the Law on Renewable Energies, which provides legal guarantee for the development of renewable energy. According to the plan, China would increase the proportion of renewable energy in the primary energy consumption from current seven percent to 15 percent in 2020, substitute fossil energy by 400 million tons coal equivalent, reduce carbon dioxide discharge by one billion tons and sulfur dioxide discharge by more than seven million tons.

China would continue to stick to expanding the opening up policy in developing energy and ensuring energy security, strengthen energy cooperation with other countries. The solution to China's energy issue needs relying on domestic resources and expanding exchange and cooperation with other countries. The Chinese government is willing to strengthen and deepen dialogue and cooperation with other countries, international organizations and multinational companies in the energy area, on the principle of mutual benefit, win-win result, business operation, government coordination, broad cooperation, diversified development, sincerity and enhancing communication.

This article edited by Zhang Guobao, Vice Chairman of the National Development and Reform Commission

China has no plan to use forex on oil stockpile

2005-09-24T19:41:00.000+02:00

China has no plans to use its soaring foreign exchange reserves to build up a strategic oil stockpile, a central bank official said on Friday. Ji Min, financial market division chief of the research bureau of the People's Bank of China, told a forum that the nation's more than US$700 billion forex reserves are still being held exclusively in non-tangible assets, mainly financial assets and portfolio investments.

Some researchers have said China should use part of its forex reserves to buy crude oil, but senior officials have said the current high prices in the international market would make it a bad move.

China's forex reserves expanded rapidly in recent years, largely as a result of its trade surpluses and expectations of local currency revaluation.

The rapid growth has also prompted debate about the necessity of holding forex reserves as large as China's, which are the world's second largest behind Japan.

Sceptics say the reserves, mostly held in United States' treasury bonds and other government bonds, are not being used profitably enough given the relatively low returns on bonds, although others argue that the role of forex reserves is mainly to protect financial security of a nation in stead of making profits.

The faster than desired growth in forex reserves has also frustrated China's central bankers, as they have to increase local money supply, which runs contrary to the strong need to contain inflationary pressures, so as to maintain the floating band of the local currency, or renminbi.

But the nation's unfolding plan to reform its exchange rate system, which aims to improve flexibility, is supposed to be reducing such pressures as it helps dissipate speculation, a strong force driving up forex inflows.

After changing a decade-old exchange rate forming mechanism to one with reference to a currency basket instead of the US dollar two months ago, the Chinese central bank yesterday further broadened the floating band of the renminbi to give banks more flexibility in pricing.

The floating range for renminbi against non-US dollar currencies in the interbank cash market has broadened to 6 per cent from 3 per cent previously.

The renminbi appreciated 2 per cent against the US dollar in the July-21 reform to 8.11 yuan.

Finland: AdLibris to set up online book store

2005-09-22T12:30:00.000+02:00

Swedish AdLibris (of which the media company Bonnier owns 75%) is setting up an Internet book store in Finland. The service is scheduled to be launched by October 2005. AdLibris will acquire a database of Finnish books from Kirjavälitys. Orders and postings will be handled in Sweden.

AdLibris is the largest online book store in Sweden, and the company's target is to become the market leader in Finland too. According to MD Magnus Dimert, AdLibris' competitive advantage is low prices.

In Finland, online sales account for 15%-20% of total book sales. The largest operators in online book sales are Suomalainen Kirjakauppa, Akateeminen kirjakauppa and Bookplus.

Mobile Phone Tells Calories

2005-09-22T12:01:00.000+02:00

A project coordinated by Technical Research Centre of Finland VTT has developed a communications service linked with consumer packaging that uses a camera mobile phone and the Internet. It shows the energy and nutritional values of foods, provides its users with a food diary and exercise meter, and makes it possible to compare products anytime, anywhere. The service also contains product searches and nutritional guidelines.

The product information on foods in a shop can be picked directly onto a mobile phone from the bar codes on the packaging. The service can be used at home via the Internet on a microcomputer. Somebody using the exercise meter can check how often he or she must perform a certain keep-fit exercise so that the system will burn off food that has been eaten.

The pilot system was developed with an eye on two consumer groups - weightwatchers and those with lactose intolerance - but it can be expanded to any consumer group whatsoever.

More information

http://www.vtt.fi/tivik/

Nordic countries get top business climate ratings

2005-09-20T00:38:00.000+02:00

Denmark and the other Nordic countries receive top ratings for their business climate, Ritzau news bureau reported on Thursday.

The Nordic countries provide some of the best conditions for conducting business, according to a study conducted by the International Finance Corporation, the World Bank's business division.

With regard to creating a favorable business climate, Denmark took eighth place, surpassed by Norway's fifth spot. Iceland, Finland, and Sweden rounded out spots 12 through 14.

Law firms, accountants, and experts from the 155 countries included in the report conducted the study.

Business developments in the Nordic countries caught the attention of World Bank vice-president Michael Klein, as he presented the results at a press conference in London.

Countries, such as Germany, mired in economic stagnation should turn to the north for inspiration instead of considering US modelsas a way to overcome their woes.

"You just have to look to the Nordic countries, and that way you can avoid the discussion of what people in Germany actually think of the US," he said.

Denmark also took a first place with regard to how easy it is to get approval to import goods into Denmark: only one signature was needed. Obtaining approval in the Congo, in contrast, was somewhat more difficult with 80 signatures required.

High taxes, fees, and duties marred Denmark's finish as a favorable country to do business in. Danish companies pay on average 63.4 percent of their net earnings to the state, while US companies can settle with 21.5 percent and Swiss companies 22 percent

Germany's Siemens to cut 4,000 jobs

2005-09-19T18:52:00.000+02:00

Germany's electronics and home appliance giant Siemens announced Monday it will cut as much as 4,000 jobs in the next two years.

The biggest cut will come in the company's communications division and more than 2,400 jobs will be cut in Germany.

In the computer services department of the communications division, 295 jobs, will be outsourced to India, the German news agency DPA reported.
"Siemens defined the 'Fit4More' program in April 2005 with the goal to reach all margin targets agreed upon and to put the company on course of sustainable profitable growth," Siemens said in a press release.

Finland: Nokia: Mobile Internet to create new business

2005-09-16T02:19:00.000+02:00

According to Yrjö Neuvo, Nokia's Senior Vice President and Technology Advisor, bringing the Internet to a mobile environment will lead to the creation of new business models where one actor provides services, another provides content, and a third billing. Neuvo emphasises that the development of digital services requires national cooperation.

According to Neuvo, all future Nokia phone models will have WLAN, and developing the mobile Internet is one of Nokia's most important targets in future. Neuvo believes Nokia will maintain its market leader position for a long time yet, as it is difficult for new companies to enter the sector.

Microsoft fails to block Lee from working for Google

2005-09-14T06:03:00.000+02:00

A state judge, ruling in a case that exposed the behind-the-scenes animosity between two high-tech titans, said Tuesday that a former Microsoft Corp. executive will be able to help Google set up a research and development facility in China in the coming months.

King County Superior Court Judge Steven Gonzalez is still barring Kai-Fu Lee from doing work on products, services or projects he worked on at Microsoft, including computer search technology. But while the judge said that a noncompete agreement Lee signed with Microsoft is valid, he said recruiting and staffing a Google center in China would not violate that agreement.

Microsoft sued Lee and Google soon after, contending that Lee's job at Google would violate the terms of a noncompete agreement, which prohibits him from doing similar work for a rival for a year. Microsoft also accused Lee of using insider information to get his job at Mountain View, Calif.-based Google.

The case has illuminated the behind-the-scenes bitterness between Microsoft and Google, which is emerging as a formidable competitor to the Redmond software giant.

Google said it hired Lee to have him create an engineering office in China, but Lee is also an expert in computer recognition of language — an important field for search engines such as Google.

The judge also chided Lee for “assisting Google” while he was still a Microsoft employee. “Dr. Lee confused the difference between the discretion given to him to disclose Microsoft’s confidential information for the benefit of Microsoft and disclosing Microsoft’s confidential information for his own benefit or the benefit of another,” the judge wrote.Enditem

Nokia Brings Mobile eMail Solution to the Corporate Masses with Nokia Business Center

2005-09-13T11:50:00.000+02:00

Helsinki, 13 September, 2005 — New software gives businesses the ability to change where and how people work

Nokia announced the Nokia Business Center, a new software solution enabling collaborative business applications for the mobile world, starting with push email. Nokia Business Center brings mobile email to the corporate masses, changing the economics of mobile email adoption so that employees at all levels can reap the rewards of virtually anytime, anywhere access to their corporate email. Nokia Business Center complements Nokia's existing portfolio of today's popular email solutions available for its business-optimized mobile devices.

Nokia Business Center is designed to expand the universe of potential mobile users by leveraging the broad availability of standard mobile phones and by providing a two-tier client strategy. The standard client will be licensed on an unlimited basis with each Nokia Business Center server. A more richly featured professional client will be available for a minimal upgrade fee. The product is a Java-based solution that can be deployed on any Java MIDPI 2.0-capable phone, once certified by Nokia. Initially, Nokia Business Center will support mobile email over the Nokia 9300 smartphone, Nokia 9500 Communicator, as well as the Nokia 6630, Nokia 6680, Nokia 6681, and Nokia 6682 integrating with Microsoft® Exchange Server 2003, followed shortly by support for Lotus Notes® and Domino®, and an expanded range of Nokia certified devices.

"Company management and IT departments face pressure from all sides when it comes to selecting an appropriate mobile email application, such as being easy to use, easy to integrate with existing infrastructure and cost savings. With Nokia Business Center, these issues are easily addressed to give companies a scalable solution that fits their needs," said Dave Grannan, general manager of Nokia's Enterprise Solutions Mobile Email group. "Nokia Business Center allows users to connect with their corporate email while on the go, and allows businesses to implement strict security measures while delivering mobile applications in a cost-effective manner."

The standard Nokia Business Center client offers the ability to compose, read and delete email, manage local folders, and provides support for working offline, in addition to push-email and state-of-the-art security. The standard client also includes support for English, French, German, Italian and Spanish. The professional client version offers all the features of the standard version as well as a rich, graphical email experience similar to using desktop email. Other professional client version features include support for handling meeting requests, sorted views, full attachment support, the ability to access any employee's contact information from the company's corporate directory, the ability to search local folders, and more.

"Today's mobile professionals require constant access to their email and corporate networks and ensuring that they have the best capabilities to do this is part of our job," said Jorge Reis, senior vice president of operations at Telstra International. "This latest initiative from Nokia further demonstrates their capability to provide state-of the-art wireless technology applications. Telstra Inc. has a long history of supporting and building solutions for Nokia and we are very pleased to be associated with this latest project."

"Nokia Business Center is an impressive email solution that will allow our enterprise customers to successfully and efficiently provide mobile workers access to their corporate email on a range of mobile devices," said Gustavo Leal, subdirector of Value Added Services at Telcel/Mexico, the leader of mobile telecommunications services in Mexico. "We are currently conducting a market trial of the solution and we are optimistic that Nokia's email solution can open the door for us to grow our base of mobile executives, increase brand loyalty to Telcel, as well as create significant customer savings through quick installation. We are pleased to work hand-in-hand with Nokia, recognized as a global leader in mobility, as they continue expanding their presence in the enterprise space."

"We have selected Nokia Business Center as our mobile email solution because it operates seamlessly with our existing infrastructure," said Duncan Scott, CIO of Sea Containers, a global transportation company. "We also believe that Nokia's platform is a great value and gives us maximum flexibility both now and in the future. In addition, Nokia's known competence in the area of security addresses our strict corporate security requirements covering information stored on devices, back-office systems and transmitted over networks."

For a secure email experience, Nokia Business Center offers a streamlined data transfer path that communicates directly with devices rather than the "store and forward" method used by most mobile email solutions. In addition, Nokia Business Center offers end-to-end encryption of data transport, storage and over-the-air synchronization.

"Nokia has a solid product portfolio that is very compelling," said Gene Signorini, Director Wireless/Mobile Enterprise Solutions for Yankee Group. "Adding a wireless email solution to their name will make their offering really stand out in this market space."

"We selected Nokia Business Center as our mobile email solution for its standards-based approach that supports variety of networks, devices and platforms that, in turn, provide us great value and maximum flexibility now and going forward," said Mark Sollazo, president & CEO for SynerComm. "In addition Nokia's legacy in the security space was the answer to our strict corporate security requirements ranging from the information stored in the device, to the back-office and even for the data traveling over the networks."

Nokia offers a comprehensive service portfolio for Nokia Business Center ranging from Technical Support to Implementation, Professional Services and Technical Training. Nokia's services are available to better serve customers and enable a successful end-to-end enterprise mobile email deployment.

Nokia Business Center can be purchased from select carriers and accredited resellers and will be available in the Americas and EMEA in the fourth quarter of 2005. Pilots will begin in other markets during the fourth quarter.

For features and technical information about Nokia Business Center, please visit www.nokia.com/business

Hu’s Visit to U.S. Full of Unexpected Twists and Turns

2005-09-11T22:34:00.000+02:00

As the President of China, the General Secretary of the CCP and the Chairman of the Central Military Commission, Hu Jintao’s first visit to the US was a long time in the planning, with careful consideration given to every aspect—or so they thought. No one on Hu’s staff was able to predict Hurricane Katrina, who has so rudely dismantled the president’s itinerary, leaving only a shadow of the original tour intact. Many observe that what was meant to be a smooth ride has become full of unexpected twists and turns.

What Is the Nature of Hu’s Visit?

The answer to this question became somewhat of an issue between the Chinese and U.S. governments of late, with representatives from each side engaged in six to eight-month-long negotiations that have yet to yield an agreement.

On August 25, the spokesperson for China’s Ministry of Foreign Affairs, Kong Quan, announced that Hu Jintao would be leaving on a visit to the West, including stops in the U.S., Canada, and Mexico. Hu was set to be gone from the 5th to the 17th of September and had included in his itinerary a stop in New York for the 60th anniversary of the United Nations.

A White House official was quick to point out that Hu’s scheduled visit to Washington DC is “by no means a state visit.” This comment seems to signal a cool reception for the Chinese president, but on the other hand, the White House is still planning a welcome on the south lawn, accompanied by 21-gun salutes. A VIP brunch at the White House will also go ahead as planned, but the banquet and joint press conference were not put into the agenda.
According to a Washington D.C. source, the treatment of Hu Jintao’s visit requested by the Chinese Embassy in the U.S. is extremely fierce and has astonished U.S. officials.

President Hu arrives in Mexico for state visit

2005-09-11T21:44:00.000+02:00

Chinese President Hu Jintao arrived Sunday in Mexico City on a state visit to further expand cooperation between China and Mexico.

During his visit, President Hu will exchange views with his Mexican counterpart, Vicente Fox, and other Mexican leaders on bilateral relations and international and regional issues.

The two countries are also expected to sign a number of cooperation documents during Hu's visit.

Since the two countries established diplomatic relations 33 years ago, bilateral relations have developed smoothly and cooperation has yielded fruitful results in various sectors.

Bilateral trade exceeded 7 billion US dollars in 2004, 44 percent higher than the previous year, and China's investment in Mexico has risen to nearly 200 million dollars.

In an interview last month, Chinese Foreign Minister Li Zhaoxing said that as developing countries, China and Mexico sharemany common interests in safeguarding world peace and promoting common development.

The Chinese president's visit to Mexico will help push forward the bilateral strategic partnership and promote cooperation between China and Latin America as well as the unity and coordination between developing countries, he said.
Hu flew in from Toronto, Canada's largest city, after a three-day visit to Canada. He will leave Mexico City Tuesday for New York to attend the UN summit scheduled for Sept. 14-16.

Google launches China search site

2005-09-08T20:34:00.000+02:00

Google Inc. launched a local-search service in China on Sept. 4, marking the Web search giant's latest move to expand its presence in the vast country's fast-growing online marketplace.

Google Local, which has up to now been available only in the United States, Britain, Canada and Japan, allows Web users to use keyword searches to find businesses in particular cities and see their locations plotted on a map. Many Internet companies are pursuing local initiatives in efforts to tap into huge offline yellow-page advertising markets.

The new service, Google Bendi, provides local information for more than 100 Chinese cities, according to a Google spokesman. Maps are available for searches related to more than 70 of those cities through a partnership with Mapabc.com Ltd., a Beijing-based Web-based mapping service.

The site appears to be an effort by Google to stretch its lead in searches for shopping and business information.

An August survey of Internet users in Beijing, Shanghai and Guangzhou by the State-owned China Internet Network Information Center ranked Google as the second-largest search engine overall after Baidu.com Inc. But the nonprofit group’s survey showed that Google is the preferred tool for finding Web pages and shopping, business and other information.

Six-party talks to resume Sept. 13

2005-09-08T19:48:00.000+02:00

The representatives from the six countries involved in six-party talks on North Korea's nuclear program hold hands as the meeting officially begins in Beijing July 26, 2005. (Reuters)
BEIJING, Sept. 8 (Xinhuanet) -- The second phase of the fourth-round six-party talks on the Korean Peninsula nuclear issue is to resume on Sept. 13 in Beijing, said Chinese Foreign Ministry spokesman Qin Gang here Thursday.

The talks will be open-ended since all the parties concerned need to make full consultations on issues concerning how to realize denuclearization of the Korean Peninsula, Qin said at a regular press conference.

"The ending date of the talks will be decided by all concerned parties according to the results of their consultations," Qin said.

The process of denuclearization is difficult and complicated, Qin said. "We can not expect to solve all the problems in just several rounds of talks, but we are not pessimistic because of that."

As long as the six parties could proceed from the overall situation of denuclearization and the maintenance of peace and stability on the Korean Peninsula, show flexibility and take a pragmatic attitude in discussing related related issues, progress would be achieved step by step during the denuclearization process, the spokesman said.

As the negotiation is drawing near, Qin said hoped that three dialogue and consultations and in the spirit of mutual respects, equal consultations, mutual understanding and mutual accommodation, all the parties concerned could take the opportunity to find a solution that gives consideration to the concerns and interests of the parties and is acceptable for all parties.

"China, as one of the six parties and host for the talks, wouldmake unswerving efforts for the talks to achieve positive results," Qin said, noting that all the parties concerned need to show a pragmatic attitude flexibility and make joint efforts to make progress in the talks.

The fourth round of the Korean Peninsula nuclear issue talks started from July 26 and recessed on Aug. 7 for resumption originally scheduled in the week beginning Aug. 29.

Int'l co-op in anti-terrorism needs to be fortified

The international community is still facing the challenge and threat of terrorism, and thus needs to strengthen cooperation, Qin Gang said.

Terrorism is public hazard of the mankind. The international community should make concerted efforts to combat terrorism, he said.

Terrorist incidents have happened in succession in Turkey, the United Kingdom and Kenya, and China is also the victim of terrorism," Qin said.

He stressed that China's stance on anti-terrorism is persistent, opposing terrorism in all forms.

However, the spokesman noted, there should not be double standards in anti-terrorism. Anti-terrorism should benefit world peace and security and promote the progress and prosperity of the mankind.

He said anti-terrorism should comply with the United Nations Charter and basic norms of international laws, highlighting that China opposes connection of the issue with certain religion and nationality.

"In order to eliminate terrorism, we should eradicate its source", Qin said.

Chinese FM to attend general debate of 60th UN General Assembly session

Chinese Foreign Minister Li Zhaoxing will head a delegation to attend the general debate of the 60th UN General Assembly session, Qin Gang announced at the press conference.

Qin said that Li will speak to the general debate, explaining Chinese government's stance on development, UN reform and the African issues.

Li will also participant in the bilateral and multi-lateral activities. They include the meetings with UN Secretary-General Kofi Annan, UN General Assembly President Jan Eliasson, and foreign ministers of some countries, as well as the consultations with the Rio Group, Cooperation Council for the Arab States of the Gulf, and the European Troika foreign ministers.

It's stupid to be afraid of China's development: Lee Kuan Yew

2005-09-07T21:22:00.000+02:00

A shift of the world's economic center of gravity from the Atlantic Ocean to the Pacific is inevitable but it's stupid to be afraid of China's development, Singaporean political mentor Lee Kuan Yew has said.

"Economically, there will be a shift to the Pacific from the Atlantic Ocean and you can already see that in the shipping volumes of Chinese ports," Lee said in a recent exclusive interview with German-language weekly Der Spiegel.

"Every shipping line is trying to get into association with a Chinese container port," he noted.

China is learning very fast from the developed world, but it's not the reason for other countries to be afraid, said the first-ever prime minister of Singapore.

"In 50 years I see China, (South) Korea and Japan at the high-tech end of the value chain," he said.

"Look at the numbers and quality of the engineers and scientists they produce and you know that this is where the R&D will be done. The Chinese have a space program, they are going to put a man on the moon and nobody sold them that technology," said Lee.

When asked about how afraid the West should be of China's rise, Lee said:"It's stupid to be afraid."

He noted that the developed world is leading in many fields which the Chinese cannot catch up with for many years, if not decades.

"In pharmaceuticals, I don't see them catching up with the Germans for a long time."

Lee Kuan Yew believed that China doesn't intend to enhance its influence through military means but economic competition.

"They will trade, they will not demand, 'This is my sphere of influence, you keep out.'" said Lee.

"I think they have calculated that they need 30 to 40 -- maybe 50 years of peace and quiet to catch up (with the developed world)," he said.

China, EU reach agreement on textile dispute

2005-09-05T20:46:00.000+02:00

All the China-made textile products blocked in the ports of EU countries will be freed up, according to an agreement reached here on Monday night by China and the European Union (EU).

The document was signed by China's Minister of Commerce Bo Xilai and EU Trade Commissioner Peter Mandelson following lengthy negotiations.

Bo said at a press conference after the signing ceremony that China neither made any mistakes nor bears any responsibility for the textile product dispute.

"But considering the interests of EU importers and retailers, (we) decided to offer a helping hand to reduce the losses of both sides."

China and the EU as strategic cooperative partners reached the agreement after earnest negotiations on an equal footing, Bo told the press.

The two sides bore the responsibility that they should bear, which reflects the principle of equality. The final agreement embodies a "cooperative, win-win" spirit, he said.

China, UK expect big deals

2005-09-03T08:58:00.000+02:00

China and Britain will sign agreements worth US$2.4 billion in the fields of aerospace technology and banking next week.

Christopher Hum, British ambassador to China, said on Friday in Beijing that the protocols will be reached on Tuesday during British Prime Minister Tony Blair's visit to China, following a talk with his Chinese counterpart, Wen Jiabao, in Beijing.

No further details were available on Friday night.

Hum said a very solid personal relationship has developed between the two leaders. This will be their third meeting as prime ministers.

Hum noted a business delegation of 37 people, mainly chiefs or chief executive officers of British companies, will be in Blair's entourage. They cover a wide range of companies in areas such as banking, insurance, manufacturing, engineering and retailing.

Blair will arrive in Beijing on Monday to attend the eighth EU-China Summit.

Serge Abou, ambassador of the EU delegation of the European Commission, said the summit will present several achievements.

A wealth of agreements are expected to be sealed in such fields as employment and social benefits, space exploration, geographical indication and maritime transport.

Abou said the EU has decided to invest 55 million euros (US$68 million) in two projects to protect the biodiversity of China's two biggest waterways the Yangtze River and the Yellow River.

He noted that there would be another significant loan worth 550 million euros (US$680 million) offered by the European Investment Bank to China for the expansion of Beijing Capital International Airport.

Finland: Consumer e-commerce grows by 35%-40% per year

2005-09-01T13:59:00.000+02:00

Helsinki, 1 September, 2005 — According to the MD of the Electronic Commerce Finland Association (ECF), Kare Casals, consumer Internet commerce has increased nearly tenfold during the last six years. At the moment, the annual growth rate is approximately 35%-40%. Over 70% of Finnish consumers have used the Internet, and 60% have used the Internet to find information about shops or products. Consumers' and companies' Internet purchases from abroad increase more rapidly than Internet purchases from Finland.

According to ECF, the main reason for growing consumer e-commerce is the increasing number of broadband connections. It has been estimated that the net sales of consumer e-commerce will total over EUR 2.7bn in Finland, in 2005.

BOC names underwriters for IPO

2005-09-01T06:43:00.000+02:00

Bank of China (BOC) named Goldman Sachs Group, UBS and Bank of China International as financial advisers and underwriters for the lender's planned US$4 billion stock listing.

The announcement ended months of jostling among major investment banks for the prestigious mandate to handle one of the highest-profile initial public offerings in years.

Bank of China said it had chosen the three banks after a rigorous assessment that took account of various factors. It said all three enjoyed a good reputation and long-established ties with the bank.

Bank of China is expected to go public by the middle of next year, generating US$120 million or more in fees for the underwriters.

Bankers said Bank of China International, the Beijing-based lender's investment banking arm, was always certain to share the mandate.

Goldman has long been viewed as a frontrunner as its close ties to the bank include working on the July 2002 listing of its BOC Hong Kong (Holdings) unit.

But the announcement deals a blow to other contenders, including Merrill Lynch, which strengthened its case by joining a syndicate that said last month it would invest a total of US$3.1 billion for 10 percent of Bank of China.

According to a news report Wednesday, Singapore government-owned Temasek Holdings was also preparing to invest about US$3 billion for about 10 percent of Bank of China.

China wants to raise money to modernize its State-owned banking industry by selling minority stakes to foreign investors while retaining control of the institutions. All of its major commercial banks are planning to sell shares abroad. Enditem

Sino-US textile talks fail to yield any result

2005-09-01T06:42:00.000+02:00

China-US textile dispute talks concluded yesterday with no progress made.

Cass Johnson, president of the US National Council of Textile Organizations, was quoted by Reuters as saying that the two-day closed-door negotiations had not narrowed the two sides' differences.

Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, who was in Beijing, said: "It appears that it's over this week, and no agreement has been reached."

There was no official response from China's Ministry of Commerce.

The US negotiating team is scheduled to head home today.

The spokeswoman of the US Embassy in Beijing said the US Trade Representative Office would possibly publish a decision on whether to launch additional caps on Chinese products today. No information about its decision is available at the time of press.

The US side promised to be prudent when initiating new safeguard measures on Chinese textile products at the Joint Commission on Commerce and Trade in July, which was attended by US and China's top trade officials. And it postponed the decision on new curbs to August 31.

Insiders had expected that this round of talks, of a higher level than the previous rounds although still "technical," would be more likely to wrap up a deal. The talks in the past two days were chaired by China's vice-commerce minister Gao Hucheng.

Compared with the EU-China agreement signed in June, "substantial differences" exist in how many categories the agreement should cover, how to calculate the base figure as well as the annual growth.

The US textile industry claimed that the ending of a global textile quota regime in January this year would see cheap Chinese textile and apparel products flooding the US market and hurting local enterprises.

The topic has grown hotter in the past couple of months, as the US Government re-imposed quotas on textile imports from China upon the industry's request in May, and the industrial association continued to file petitions for curbs on more categories.

China president Hu to visit US in Sep, he will send message of peace during US visit

2005-08-31T03:58:00.000+02:00

Chinese President Hu Jintao will send a message on China's peaceful development during his upcoming visit to the United States.

"President Hu Jintao's visit will deliver the important message to the US leadership and the US public that China is a force for peace," said He Yafei, director of the Department of North American and Oceanian Affairs of the Foreign Ministry.

He briefed a press conference on Tuesday on President Hu's upcoming state visits to the United States, Canada, Mexico from Sept. 5 to 17. Hu will also attend the United Nations' summit marking the 60th anniversary of its founding, He said.

"China's development is peaceful development," said He, The peaceful development is conducive not only to the Chinese people, but also to the American people and the people in the world, He added.

"Through the visit, the American people and the people in the world will have better understanding on China's peaceful development," said He. "This will also help improve China-US relations and relations between China and the rest of the world."

President Hu will visit Seattle and Washington DC and deliver aspeech in Yale University. Besides he is also scheduled to meet US congress members, officials, businessmen, academics and the general public, according to He.

On energy issue, He said China has been exploring energy marketin line with international rules. "Energy issue is the one that each country is facing, China has no intention to scramble for world energy supply with other countries."

China is willing to achieve mutually beneficial and win-win through cooperation on a equal footing, He said.

EU trade commissioner proposes to end textile dispute with China

2005-08-28T20:23:00.000+02:00

The European Union (EU) Trade Commissioner Peter Mandelson said on Sunday that he will on Monday propose to end a trade dispute which has stopped millions of itemsof Chinese clothing from entering Europe.

"I'm making proposals, the Commission is making proposals to our member states... to begin the proceedings to unblock all the goods currently held at customs," Mandelson said in an interview with the BBC News 24.

"And if they cooperate I believe that we will be able to unblock all the goods currently held at customs by the middle of next month," he added.

In the past four days, the EU and China have been negotiating in Beijing to find a way to unblock some 75 million pieces of clothing being held at ports in EU member states.

The problem stems from a new limit on Chinese clothing imports to the bloc, which came into force in June and was designed to protect the EU's own clothing manufacturers.

Reports said China has already exceeded its quota for this year, so its clothing exports are not being allowed into Europe.

But some of Europe's biggest high street names have warned thattheir shelves may start to empty if the goods are not released, and it now looks as if EU officials will have to increase China's 2005 quota after only two months.

Mandelson said the same problem would not reoccur next year andhe hoped the held goods would be given "speedy passage".

He said the problem was partly caused by the rapid expansion ofChinese manufacturing which could not have been foreseen.

"Nobody has been made bankrupt, however, there are many retailers - and I'm particularly concerned about small and medium sized retailers - who have faced difficulty and it's not right they have done so," said the trade commissioner.

With around 50 million sweaters and 17 million pairs of trousers already detained at European ports, big name stores across the continent are increasingly anxious that these Chinese-made clothes should be released in time to prepare for the Christmas rush.

T-shirts and bras are the latest items to join the list of products that have reached their EU quota limits.

Meanwhile, it was announced that Chinese and US officials will hold a fourth-round of talks to try to reach a comprehensive deal on Chinese textile exports to the US.

China's development benefits US economy

2005-08-28T16:49:00.000+02:00

The US economy has benefited greatly from China's economic growth, and "simply blaming China will not solve issues relating to US economic transformation," an American expert on anti-dumping laws said Friday in an interview with Xinhua.

"China and the United States are the twin engines of world economic growth. China's economic development has numerous beneficial effects on the US economy," said Jeffrey S. Grimson, 38, Counsel and Chair of the China/International Trade Practice ofKaye Scholer LLP, an international law firm with over 500 lawyers on three continents.

Foremost, "Chinese goods have a reputation for being low-priced. The availability of low-priced goods has had a beneficial impact on the US economy, by enabling consumers to enhance their standard of living while keeping inflation down," said Grimson who have been working in the field of anti-dumping laws for 15 years.

Chinese products are moving up the scale of quality too, he added.

Also, economic prosperity in China means more potential customers for US goods and services, he said.

What's more, "the rise of China as a manufacturing superpower has pushed US business to modernize and achieve ever higher levelsof efficiency and productivity," said Grimson.

Grimson holds that it is not right for US manufacturers to blame China for a decline in US manufacturing jobs, saying "the transformation of the US economy started long before the current 'crises' with China's trade imbalance, the currency, or textiles. Simply blaming China will not solve issues relating to US economictransformation."

According to statistics compiled by the US-China Business Council, he said, the US manufacturing sector's share of the US economy has fallen from 32 percent in 1960 to 22 percent in 1980, and to 14 percent in 2002.

Grimson noted that "in fact, the decline in the contribution ofthe US manufacturing sector to the overall economy began long before China's emergence" as a major trade power.

On the bilateral economic and trade relationship, Grimson said the overall economic and trade ties between China and the United States are built on a strong foundation of mutual benefit, and thefact that the relationship is not viewed in the United States as a"two-way street" is in part because the US-China trade statistics are typically viewed in isolation, rather than in broader regionalterms.

For example, less than half of the US trade deficit in 2004 is related to trade with East Asian countries, including China, he said, while "overall, the US trade deficit with the rest of the world has increased nearly three times as much as the trade deficit with China over the past ten years."

Because of the negative perception of the US-China trading relationship, trade disputes that might otherwise be considered anexpected consequence of such a large volume of trade take on a whole new political aspect, Grimson noted.

"Groups interested in curtailing free trade are able to capitalize on the negative political environment to achieve objectives that might not otherwise be attainable," he said.

It is essential for the two countries to handle trade disputes in an objective,transparent fashion, abiding by fundamental principles of fairness in addition to merely the strict letter of international and domestic law, said Grimson.

"For the United States, abiding by international trade agreements is paramount to maintaining global credibility as a country committed to open markets not only abroad, but also at home," he said.

"Unilateral action is not the ideal way to resolve trade disputes," Grimson noted, "Quotas, especially unilateral quotas, are the opposite of what the international free trade rules seek to achieve."

Grimson has traveled to China many times over the past 10 years. When asked about his impression of the Chinese economy, hesaid that the pace of growth of China's economy is unprecedented.
"China is speeding through decades of development in only a fewyears. As such, the country has the opportunity to learn from the mistakes of countries. In particular, China can look to the lessons of other developed countries in areas such as urban planning and the environment," he said.

China, US to hold 4th round textile talks

2005-08-28T16:44:00.000+02:00

China and the United States will hold the fourth round of talks on the textile issue during Aug. 30-31 as the two countries failed to reach any agreement in the third round ending in San Francisco on Aug. 17, the Chinese Ministry of Commerce said Saturday.

The two countries still have substantial differences in some matters of principle concerning the issue, and agreed to continue consultations to seek solutions to the problem, a ministry spokesman said.

This is meant to create an environment for the steady development of bilateral textile trade, the spokesman added.

It was reported that the US side would make a final decision on imposing restrictions on six categories of Chinese textile products before Aug. 31.

So far, some 20 kinds of Chinese textile products have been put under US restrictions or are under restriction-related investigations.

China and the United States held the first round of talks on the textile issue on June 17 and the second round on July 8.

Finland/World: On future of remote payment systems

2005-08-25T15:17:00.000+02:00

Helsinki, 25 August, 2005 — According to the Petri Carpen, Deputy MD of the Finnish credit card service company Luottokunta, remote payment cards will become common, because the speeding up of the payment process brings added value to all parties involved.

Visa, MasterCard and Amex have promised to support remote payments. Visa has announced that it will start the distribution of remote payment terminals to its customers in 2005.

Nokia is involved in a public transport experiment in Germany, where the payment is done with a chip that is inside a mobile phone. In the Netherlands a payment card that is incorporated into a Nokia phone is used at football stadiums.

According to Luottokunta's MD Heikki Kapanen, remote payment terminals will become common in Finland after the transition to EMV chip terminals has taken place in 2006. Remote payment systems are easy to incorporate with EMV terminals, which only cost a few dozen euros.

EU, China begin talks on textile row

2005-08-25T13:30:00.000+02:00

China and the European Union began talks on textile products blocked at Customs of EU countries Thursday afternoon, the Xinhua News Agency reported.

The EU is under fierce pressure from fashion importers to review quotas agreed with China in June after six out of 10 textile categories covered by the import restrictions were filled, according to AFP.

Millions of clothing items shipped to Europe in excess of their quotas have been blocked by customs officials -- to the anger of European retailers anxious to fill their shelves ahead of the winter season.

This includes some 48 million sweaters, 17 million pairs of trousers and nearly 500,000 blouses, according to the latest figures cited by the French trade ministry.

In addition to this, 1.6 million T-shirts, 3.4 million bras and 1,470 tonnes of flax yarn are also being kept back because they exceed the quotas.

"We now need a pragmatic solution that deals with the immediate overshoot and with goodwill on all sides, we can do this," EU trade commissioner Peter Mandelson said in a statement issued in Brussels.

His comments were made following a meeting of EU members -- which was not attended by Mandelson -- where there was "a clear and general agreement on the urgency of the situation regarding blocked textile imports from China," the statement said.

The expression of unity comes amid an emerging division between mainly textile producing member states such as France, Italy and Portugal, who originally lobbied for the quotas, and others, such as the Nordic countries, that have growing reservations about the entire deal.

Facing growing pressure from retailers, Brussels has said that it is willing to be more flexible about quotas but Mandelson stressed the June "agreement stands."

"It addresses, with the Chinese, a temporary, short-term need to respond to the extreme public fears and political pressures that built up over the Chinese textiles exports engulfing European markets and displacing goods from other developing countries," he added.

China also appeared eager to see the EU expand the June quotas, to at least allow shipped goods to enter Europe, a move that would bail out EU retailers who have already paid for the imports and save them costly storage and reshipment expenses.

"Cancelling the quotas is what we hope for most and is also the hope of England, Germany, Sweden, Denmark and Finland, but it will make other countries unhappy, so it's not a possible solution," Mei Xinyu, a leading analyst at the Ministry of Commerce told AFP.

One "measure is to use part of next year's quota this year, but it is not enough to solve the problem, so a much better idea is to lift the quota by a very large scale."

EU and Ministry of Commerce officials appeared eager to play the talks down to the media, refusing to immediately name delegation heads or the agenda of what is expected to be working-level talks.

The First Results From the Finnish Mobile TV Pilot Positive

2005-08-24T09:08:00.000+02:00

Mobile TV broadcasts continued in August at the IAAF World Championships in Athletics in Helsinki, where the guests of the companies behind the Finnish Mobile TV project were able to use mobile TV for the first time at an international sporting event.

YLE (The Finnish Broadcasting Company) provided mobile TV users with a multi-channel package, including a domestic broadcast of the Championships. In addition, mobile TV (Nokia 7710 smart phone equipped with a special accessory) users received the compilation broadcast for international distribution and five special Championships broadcasts of individual events.

DVB-H technology - developed also in FENIX technology programme - allows television channels to be distributed effectively to users of mobile devices. All television channels and special event channels can be accessed by viewers as live broadcasts cost-effectively irrespective of the number of recipients.

China lifts deposit rates for US, HK dollars

2005-08-22T23:16:00.000+02:00

China will lift the upper limits of the deposit rates for US dollars and Hong Kong dollars in commercial banks within Chinese territory.

The People's Bank of China (PBoC), the nation's central bank, declared Monday that the upper limits for one-year deposits of both US dollars and Hong Kong dollars will increase 0.375 percentage points to 2.000 percent and 1.875 percent, respectively.

Tian Yaling, an expert on foreign exchange, said the PBoC's interest hike is related to the interest hike by the United State's Federal Reserve.

"The interest change reflects China's efforts to act in line with the international community," said Tian, noting that the interest hike may temper the anticipation of Renminbi appreciation.
This is the third time this year that the central bank increases deposit rates for the two currencies. The first was on July 22 when the country initiated the reform of Renminbi exchange rates. PBoC statistics shows that deposits of foreign currency decreased by 4.8 billion US dollars in July.

Taiwan: KMT congress adopts policy to promote peace

2005-08-21T14:03:00.000+02:00

The 17th National Congress of the Kuomintang (KMT), or the Nationalist Party of China, concluded Saturday afternoon in Taipei after adopting a policy platform to promote peace across the Taiwan Straits.

According to media reports in Taiwan, the "common aspiration and prospects for cross-Straits peace and development" jointly issued by the Communist Party of China (CPC) and the KMT are listed as the first item of the policy platform, which indicates the KMT will go all-out to promote cross-Straits peace and stability.

The platform also pledges to oppose "Taiwan independence" and advocates returning to the "1992 Consensus" to restart cross-Straits talks, phasing in a "cross-Straits common market", realizing the "three direct links", completely removing barriers to mainland tourists and pushing forward cross-Straits agricultural exchanges.

The congress also installed former party Chairman Lien Chan as the party's honorary chairman and elected the new term of the Central Committee and Central Standing Committee.

China, Russia starts joint military exercises

2005-08-18T18:02:00.000+02:00

Chinese and Russian troops started a cynosural 8-day military exercise in Russia's coastal city Vladivostok on Thursday, marking the first-ever war game between the two countries.

After conducting a brief high-level strategic consultations for the exercise, Liang Guanglie, chief of the General Staff of the Chinese People's Liberation Army and his Russian counterpart Yury Baluyevsky jointly announced the official commencement of the military exercises at around 11:00 a.m. local time (8:00 a.m. Beijing time) in the base of Russia's Pacific Fleet on Thursday.

Chiefs of the general staff of the Chinese and Russian armed forces jointly announced the official commencement of the first Chinese-Russian joint military exercise, code-named "Peace Mission 2005", in Russia's Vladivostok at 11:00 a.m. local time (8:00 a.m. Beijing time) Thursday.

Gen. Liang Guanglie, the chief of the general staff of the Chinese People's Liberation Army, left and Gen. Yuri Baluyevsky, the head of the Russian armed forces general staff, salute at a World War II memorial in Vladivostok, Russia, Aug. 18. 2005. (Photo: AP)

The exercise, code-named "Peace Mission 2005," is scheduled to involve nearly 10,000 troops from the two armies, navies, air forces as well as airborne units, marine corps and logistic units, according to an earlier announcement made by the Chinese Ministry of Defense.

Four hours after the commencement, the first phase of the military maneuvers officially started with staff officers carrying out strategic consultations and battle planning at the order of the chiefs of the general staff of the two armed forces.

While attending a press conference later in the morning, Liang denied the military exercise aims at any third party, concerns the interests of any third country or will pose threat to any country.

The participating troops will focus on the maneuvers of strategic consultations and battle planning, transportation and deployment of troops, and combat practice, said Liang.

Baluyevsky, Liang's Russian counterpart, said the holding of the joint military exercises does not mean that the two countries want to form a military bloc in any form.

According to the two generals, the joint military drills target at deeper mutual trust and friendship, and better cooperation and coordination between the two armed forces so as to improve their capabilities to deal with new challenges and threats.

To be more specific, the war game showcasing the two countries'military might is aimed to help them get ready for a joint fight against international terrorists, national separatists and religious extremists, said Sergey N. Goncharov, charge d'affaires of the Russian Embassy in China, in an exclusive interview with Xinhua in Beijing on Thursday.

According to the Russian diplomat, the forces of terrorism, extremism and separatism have conducted activities in both China and Russia, and have been growing in the member countries of the Shanghai Cooperation Organization (SCO), which groups China, Russia, Uzbekistan, Kazakhstan, Kyrgyzstan and Tajikistan.

Let them have a look at our joint military exercises and think it over whether it is worth continuing their activities," said Goncharov, adding, "We hope the joint military exercises could help cool down the 'fervor' of these terrorists, separatists and extremists."

The diplomat expressed hopes that similar drills would be held within the SCO framework in the future, which he said might involve more troops.

Defense ministers and military experts of the SCO member nations, and their ambassadors and military attaches to China have been invited to observe the exercise.

Representatives of SCO observer countries such as Mongolia, India, Pakistan and Iran are also invited to watch the military exercise, according to military sources.

According to the schedule, the second and third phases of the 8-day mission will be staged in China's Shandong Peninsula and its neighboring sea area. Enditem

U.S., China textile talks scheduled for next week

2005-08-16T18:10:00.000+02:00

WASHINGTON: The U.S. Trade Representative's office said on Tuesday that U.S. and Chinese officials will hold textile trade talks next week in San Francisco but the Bush administration has not decided whether to formally seek a comprehensive textile trade deal with Beijing.

The Aug. 16-17 talks are the latest in a series of "consultations" required under world trade rules after the United States imposed emergency import curbs in May on billions of dollars of clothing from China, said John Stubbs, a spokesman for the U.S. Trade Representative's office.

They are also the first face-to-face meetings between U.S. and Chinese textile trade officials since Commerce Secretary Carlos Gutierrez said last week the United States could seek a comprehensive textile trade agreement with China.

The Bush administration is still consulting with Congress and industry groups on that issue and has not made a final decision yet, Stubbs said.

Meanwhile, Chinese President Hu Jintao is expected to meet with President Bush near the time of next month's United Nations General Assembly meeting in New York.

U.S. textile groups want a deal with Beijing that would eliminate the need for them to file petitions asking the Bush administration to impose emergency import curbs, as World Trade Organisation rules allow through the end of 2008 under the terms of China's entry nearly four years ago.

Imports from China in many key clothing categories have already hit the ceilings set earlier this year by the Bush administration.

The European Union and China reached a textile agreement in June covering 10 categories of clothing and textiles through 2007. However, European retailers are already pressuring Brussels to reopen the pact to allow more sweaters in.

China's economy to grow by 9% in 2005

2005-08-16T18:08:00.000+02:00

BEIJING, Aug. 16-- The World Bank said Tuesday China's economy is expected to grow by 9 percent in 2005, and about 8 percent in 2006.

In its quarterly update on the country's economy, the China mission of the World Bank said the economic outlook for China "remains good" in a stable macroeconomic environment and with favorable financial conditions.

"We now project (China's) GDP (gross domestic product) growth of 9 percent in 2005, and about 8 percent in 2006," the bank said in the report released in Beijing Tuesday.

The bank based the projection partly on global economic factors, saying the growth in world economic activity and trade is projected to slow during the rest of 2005.

"World trade growth is now expected to slow from 12 percent in 2004 to 6.4 percent in 2005, which is likely to affect China's export growth."

China's exports will also be affected "somewhat by the modest revaluation of the RMB (the Chinese currency)" and the recent measures designed to discourage exports of "highly energy intensive products" including the cancellation of rebates to exporters of VAT (value-added tax) on aluminum and steel, the bank says.

"Domestically, investment growth is expected to ease, reflecting the moderation in credit growth since the first half of 2004 and the more recent reduction in profitability and profit growth

Price pressures are projected to ease. International raw material prices are generally easing, with the important exception of oil (energy) prices, according to the report.

Based on past patterns and the World Bank's international commodity price projections, increases in China's raw materials prices are expected to decline from 9.6 percent year-on-year in the second quarter to 7.3 percent in the fourth.

In addition, continued rapid productivity increases in China's manufacturing industry put downward pressure on prices, the report says, adding that the recent revaluation of the Chinese currency will help ease imported inflationary pressures somewhat.

According to the bank, China's domestic demand is slowing down.GDP growth remains high due to a large contribution of external trade as exports continued to power ahead while imports decelerated significantly.

"Net of external demand, the GDP numbers suggest that a slowdown in domestic demand is under way."

"Slower credit and profit growth, lower FDI (foreign direct investment) and modest growth in machinery and equipment imports are pointing to a further slowdown in investment to a more sustainable pace in the period ahead."

The change in the exchange rate system and the accompanying revaluation may further slow domestic demand, but the impact on the trade balance is likely to be limited, the report says.

The bank suggests China's macroeconomic policy makers should remain alert to the possibility that risks materialize, for now the focus could be more on the structural issue of rebalancing growth.

The rebalancing would be away from the relatively volatile export and investment-based growth to more stable consumption-based growth, it says.

"Measures in social security and shifting government spending away from investment towards health, education, and social safety could help increase consumption's share in GDP, policies that would also help in redressing the surpluses on the current account."

To maintain growth and employment creation as consumption increases, however, more efficient investment as well as a shift of investment to services is needed, it says.

"Financial sector reforms, better corporate governance, and a dividend policy for state enterprises could be measures towards that goal."

China premier under fire over rising medical costs - Benjamin Kang Lim

2005-08-15T08:00:00.000+02:00

Chinese Premier Wen Jiabao, under fire from political rivals over the disintegration of medical welfare, has pledged to expand a pilot program that provides subsidized care to rural residents, sources and state media said.

The vow came days after a 42-year-old farmer with terminal lung cancer set off a home-made bomb aboard a bus in the southeastern province of Fujian in a suicide attack one political source said was linked to his inability to afford treatment.

Wen chaired a cabinet meeting on Wednesday which decided to accelerate the two-year-old pilot program and expand it to cover 40 percent of rural counties nationwide by 2006 from 21 percent now, the official People's Daily reported on Thursday.

Cingular, RadioShack to team up

2005-08-15T07:07:00.000+02:00

Cingular Wireless LLC and RadioShack Corp. are expected to announce a 10-year deal Monday that will put Cingular into more than 5,000 RadioShack-owned stores in the United States.

RadioShack, which currently sells Verizon Wireless and Sprint products through its retail stores, would become Cingular’s largest distribution network when the agreement goes into effect in the first quarter of 2006.

The agreement is expected to boost RadioShack’s lagging wireless sales. Company officials blamed weakness in RadioShack’s wireless business July 19 when they reported a 23 percent decline in net income for the second quarter.

Cingular will also get a needed lift as it fights to stay in the lead among U.S. cellular phone companies. Cingular claims 51.6 million subscribers on June 30, ahead of No. 2 Verizon with 47.4 million, but its lead over Verizon has been shrinking.

Cingular operates 2,300 company-owned stores and kiosks, sells its postpaid products in 5,100 retail stores owned by others and is sold through 15,000 authorized agent locations.

Cingular is expected to sell both postpaid services – the more common type of cellular services with annual and two-year contracts – and prepaid services through RadioShack. RadioShack will sell Cingular’s entire line of phones and other products.

RadioShack chief executive officer David Barnes had confirmed the company’s previous guidance for 2005 earnings at a conference call with analysts July 19. However, he left hints that changes could be in store with its wireless partners.

“Note also that our full year outlook does not reflect any potential impact of changes in our relationships with our wireless carrier partners,” Mr. Barnes told analysts. “Both of our existing agreements are up for review within the next 12 months. discussions with carriers are underway.”

There was no immediate word about RadioShack’s plans for Sprint and Verizon, although it may be cutting its Verizon arrangement. Adding Cingular gives RadioShack a chance to sell wireless service based on the global GSM technological standard, along with the CDMA standard used by both Verizon and Sprint.

Cingular officials have been promising to improve Cingular’s distribution system as it works through the merger of its nationwide sales network with that of AT&T Wireless, the rival it bought last year.

The deal with RadioShack “builds on Cingular’s already-strong distribution system,” Cingular president and CEO Stan Sigman said.

“RadioShack brings a nationwide network of stores and a team of knowledgeable and helpful salespeople with an unparalleled understanding of wireless products. Cingular is looking forward to leveraging these new sales channels to grow our business and serve our customers,” he said.

Liu XIANG-World Champion for 110 Metres Hurdles

2005-08-13T07:00:00.000+02:00

Olympic champion Liu Xiang, who finished second in the 110m hurdles final at the 10th athletics worlds, said he thought he had won the world champion after crossing the finish line.

"I thought I'd won," the 22-year-old said. "I only have myself to blame. The results would be different if I had crossed the first two hurdles better."

Liu, who won the Olympic gold in a world record-tying 12.91 seconds, said he was only a little disappointed with the results, but added immediately that he was satisfied with the time.

"The time of 13.08 seconds is OK because it was a little windy tonight," he said.

Ladji Doucoure of France, who led the world this season with 12.97 seconds, overtook the Chinese in the final meters to win the race in 13.07 seconds. Liu was second in 13.08.

Four-time world champion Allen Johnson of the United States took the third in 13.10.

Liu, who won China's first Olympic gold in men's track and field events, said that his form is by no means comparable with that before the Olympic Games.

"I am not in my best shape," he said. "I can say that Doucoure and Johnson are now both stronger mentally than me."

Liu has experienced a lot after he rose from a shy guy to China's No. 1 sports star after winning the Olympic gold. He almost had no time to train for nearly half a year because there were so many invitations for social activities.

He has been always mobbed in China by fans asking for autographs. All these had exerted heavy pressure on him. He was always chased by Chinese journalists, especially those from his hometown Shanghai, for exclusive interviews.

Before his first run in the championships, Feng Shuyong, head coach of the Chinese national team, urged the Chinese press to ease pressure on him and give him a relaxing environment.

But Liu, who was described by Chinese national team manager Yu Weili as "mentally tough", did not attribute his defeat to the pressure.

"It's impossible for Liu Xiang to win the gold every time," he said after the race. "I hope the fans and the press don't be so demanding."

About : Liu Xiang (born July 13, 1983 in Shanghai, China) is a hurdling athlete. In 2002, Liu launched his career in fine style by winning the first IAAF Grand Prix in Lausanne with a world youth and Asian record time of 13.12 seconds in the 110 metres hurdles. He has since made the finals at the IAAF World Championships in Athletics and IAAF World Indoor Championships in Athletics (twice); two of the three cases has seen American hurdling great Allen Johnson take the major prize, but in the last in May at Osaka, Liu managed to beat Johnson with an Asian-record time of 13.06 seconds. Still young, Liu has improved steadily, and won a gold medal at the 2004 Summer Olympics in the 110 meters hurdles event. In the final, he equaled the world record of 12.91 seconds held since 1993 by Colin Jackson of Wales.

Yahoo, Alibaba made the agreement today: Yahoo spends billions on Alibaba.com

2005-08-11T20:40:00.000+02:00

Thursday 11 August 2005

YAHOO AND CHINESE e-commerce company Alibaba.com have agreed to form a long-term partnership in China, where Yahoo will offer its Yahoo! China business to Alibaba.com and the companies will work together to grow the Yahoo brand in China.

Yahoo is investing $1 billion for Alibaba.com shares from the company and shareholders, which will give Yahoo a 40% economic interest with 35% voting rights, making it the largest investor in Alibaba.com.

The new, combined entity will include Alibaba International, Alibaba China, AliPay, Taobao, and the Yahoo! China properties. The joint effort will create one of the biggest Internet companies in China, and will be the only one with a leading position in sectors such as business and consumer e-commerce, communications and online payments.

The deal should be done in the fourth quarter of 2005, and is valued overall at just over $4 billion.

This is only the start of acquisition, more combinations are coming from China Internet companies.

Yahoo! In Talks On Record China Investment

2005-08-10T19:44:00.000+02:00

Web media company Yahoo! is in advanced talks to purchase an approximately 35% stake in China's biggest homegrown e-commerce company for almost $1 billion, in what would be the biggest investment by a foreign company in China's Internet industry to date, sources close to the negotiations said.

Yahoo! (nasdaq: YHOO - news - people ) would be gaining one of China's most coveted Internet partners. Alibaba.com is led by Jack Ma, a onetime English teacher whose unpretentious style and quick wit have made him one of China's most revered entrepreneurs. Alibaba operates two online business sites--Taobao.com, an online auction site, and Alibaba.com, an online trading site. Both were ranked among the world's top 40 Web sites on Sunday by Alexa, the Internet monitoring service.

The talks are nearing completion amid a stunning runup in the valuations of China's Internet companies by Western investors angling to profit from the country's economic and Internet boom.

On Friday, shares in China's biggest online search company Baidu.com (nasdaq: BIDU - news - people ) more than quadrupled on their first day of Nasdaq trading, the biggest one-day rise for a U.S.-listed IPO in four years, that left the company valued at $4 billion. Baidu ranked No. 6 on Alexa's list of the world’s Top 500 Web sites on Sunday, but had revenue of only $14 million last year.

Investors buoyant about China's economic outlook last month paid roughly 30 times 2005 earnings for shares in Shanghai-based ad broadcaster Focus Media (nasdaq: FMCN - news - people ) after its stock began trading on the Nasdaq. The market capitalization of the company--only in business for two years--stands at around $700 million.

The talks between Yahoo! and Alibaba are complicated because they involve three big sets of valuations--Taobao, Alibaba's other assets and Yahoo!'s assets in China. Yahoo! last year purchased a local keyword search company named 3721 Network Software for what it said would be as much as $120 million, and the business has been a success even though its founder Zhou Hongyi recently announced plans to leave 3721 as well as his post as chief of Yahoo! China.

China’s rapid growth in Internet users, rising disposable income, low Internet penetration rate, huge population of mobile phone users and growing e-commerce have put the country front and center on the radar of most of the world's Internet companies. Western Internet businesses that as a group have been wary of the uncertainties of China's regulatory environment have been wading deeper into the country's swampy waters. Among them, Microsoft (nasdaq: MSFT - news - people ) and Google (nasdaq: GOOG - news - people ) aim to expand their presence here this year.

An agreement between Yahoo! and Alibaba would be a setback for eBay (nasdaq: EBAY - news - people ), which has been expanding its investments in China's online auction business and had been seen as interested in partnering with Alibaba. The U.S. company purchased locally owned EachNet, then China's biggest online auction site, in two stages for $180 million in 2002 and 2003. For Alibaba, a hookup with Yahoo! rather than eBay might make more sense because there is less overlap with its core online auction business. It would also bring Alibaba the chance to tap into Yahoo!'s search expertise.

In Alibaba, Yahoo! would get access to one of the country’s best local Internet teams and obtain greater reach than ever into China. Given the high valuation Baidu earned from investors, Yahoo! may well be seen as getting a bargain, depending on the specifics of Alibaba's finances.

Alibaba was founded in 1999 and is based in scenic Hangzhou, home of China's famous West Lake and a favorite spot of Marco Polo when he made his legendary trips to the country centuries ago. The city also ranked No. 1 on Forbes China's list of the country's best business locations last year and is located in Zhejiang, a thriving center of entrepreneurism in a country that has come a long way from its post-World War II Maoist roots. Bill Clinton, a modern-day storied traveler, is scheduled to visit there to speak at an annual Internet conference sponsored by Alibaba to be held on Sept. 10.

US Has Little to Teach China about Steady Economy

2005-08-10T04:47:00.000+02:00

There is a second myth: that China would benefit from letting its exchange rate float freely, letting market forces set the price. No market economy has foresworn intervening in the exchange rate. More to the point, no market economy has foresworn macroeconomic interventions. Governments intervene regularly in financial markets, for instance, setting interest rates. Some market fundamentalists claim that governments should do none of this. But today, no country and few respectable economists subscribe to these views. The question, then, is what is the best set of interventions in the market? There is a high cost to exchange rate volatility, and countries where governments have intervened judiciously to stabilise their exchange rate have, by and large, done better than those that have not.

Exchange rate risks impose huge costs on companies; it is costly and often impossible to divest themselves of this risk, especially in developing countries. The question of exchange rate management brings up a broader issue: the role of the state in managing the economy. Today, almost everyone recognises that countries can suffer from too little government intervention just as they can suffer from too much. China has been rebalancing and, over the past two decades, markets have become more important, the government less so. But the government still plays a critical role. China’s particular blend has served the Chinese well. It is not just that incomes have been rising at an amazing 9 per cent annually, and that high rates have been sustained for more than two decades, but the fruits of that growth have been widely shared. From 1981 to 2001, 422m Chinese have moved out of poverty.
The US economy is growing at a third the pace of China’s. Poverty is rising and median household incomes are, in real terms, declining. America’s total net savings are much less than China’s. China produces far more of the engineers and scientists that are necessary to compete in the global economy than the US, while America is cutting its expenditures on basic research as it increases military spending. Meanwhile, as America’s debt continues to balloon, its president wants to make tax cuts for the richest people permanent. With all this in mind, China’s leaders may not feel they need to seek advice from the US on how to manage either the exchange rate or the economy.

China's Huawei in talks to buy UK's Marconi-paper

2005-08-09T16:43:00.000+02:00

British telecoms equipment maker Marconi Corp. Plc is in talks to be taken over by its Chinese partner Huawei Technologies for more than 600 million pounds ($1.07 billion), the Sunday Times newspaper said.

Marconi, whose prospects were thrown into turmoil earlier this year after top customer BT Group Plc bypassed it on a major contract, has previously said it is considering all strategic options.

The paper, citing unnamed sources familiar with the talks, said Huawei was yet to present a formal proposal to Marconi's board and finalizing a takeover could take many months.

"Marconi is also understood to be continuing to pursue other strategic options, including talks with other prospective buyers," the Sunday Times said.

The UK firm and Huawei, China's biggest telecoms equipment maker, already have an agreement to distribute each other's products.

The paper said Marconi was represented in the talks by Morgan Stanley, while Huawei had enlisted investment bank UBS to advise it on the transaction.

Officials at Marconi, Huawei and the two banks were not immediately available to comment on the report.

Unlisted Huawei and its top domestic rival, ZTE Corp. , have been using their low-cost advantage to expand abroad aggressively in the last two years, scoring major deals in less-developed markets like the Middle East, Africa and Eastern Europe.

Huawei has also been aggressive in Western Europe in recent months, announcing major sales and tie-ups with such major names as Dutch carriers Telfort and KPN and Britain's BT.

Marconi, on a slow road to recovery after nearly collapsing in 2001, received a major jolt in April after BT cut it out of its 10-billion-pound network upgrade plan.

The company, a successor to the once-mighty GEC industrial empire, lost nearly half its market value in the aftermath of the BT setback and has since announced plans to cut 800 jobs.

Earlier this week, Marconi posted a wider first-quarter operating loss on lower sales and maintained its forecast of flat annual sales amid pressure on margins. ($1=.5619 Pound)

Finland: Playing TV games via mobile very popular

2005-08-09T16:03:00.000+02:00

Helsinki, 9 August, 2005 — In Finland, TV games that are played via mobile phone have become a significant business, and the concept is expected to become a success also elsewhere. The games have been sold to over 30 countries.

According to Prisma Consulting, the games played on TV channels MTV3, Subtv, and Nelonen generate about EUR 2mn a year. On average, viewer figures are in the tens of thousands, but even 100,000 viewers have been achieved. The most enthusiastic players are young boys.

According to the Finnish Consumer Agency, the games may be a source of significant cost to players and the Agency has received several complaints. A problematic issue is whether children are directly being encouraged to play.

According to MD Juha-Pekka Louhelainen of TV channel Nelonen, TV games are a new service that is very suitable for the digital format. In future, the games may form a significant source of income for TV channels

Finland: Analysts reject rumour about Cisco and Nokia

2005-08-09T14:55:00.000+02:00

Helsinki, 9 August, 2005 — Analysts in Finland reject market rumours that Cisco is interested in acquiring Nokia, as there would be industrial logic in the deal. According to Opstock's analyst, Nokia concentrates on consumer products while Cisco concentrates on the business market. So far, Cisco has been interested in expanding in the direction of operators not device manufacturers. According to Nordea's telecom expert Karri Rinta, Cisco already has access to new business with its present product portfolio even without Nokia.

According to the article in the Business, Cisco is interested in Nokia for its network business. The network business only bring in 20% of Nokia's net sales, however, so acquiring all of Nokia for this would not be sensible, says a Finnish FIM Group analyst.

Analysts believe that Cisco is targeting another network manufacturer, such as Canadian Nortel Networks.

Innovation Gives Finland A Firm Grasp on Its Future

2005-08-07T23:22:00.000+02:00

By Robert G. Kaiser

Washington Post Staff Writer

Thursday, July 14, 2005;

HELSINKI -- The political and economic malaise that afflicts so much of Europe this summer has not infected this northernmost outpost of the European Union. The contrast between Finland's optimism about the future and Old Europe's gloom is striking.

While France, the Netherlands, Italy, Germany and others are stumbling, Finland prospers, both economically and psychologically. The recent "no" votes in France and the Netherlands that undermined, perhaps fatally, the E.U.'s proposed constitution have produced a pervasive despair in much of Europe that did not turn up in recent interviews with scores of Finns.

Jura-Pekka Tolbanen uses his cell phone to take a picture from the top floor of the Jyvaskyla Science Park. Such research and development projects have helped remake Finland's economy.

Jura-Pekka Tolbanen uses his cell phone to take a picture from the top floor of the Jyvaskyla Science Park. Such research and development projects have helped remake Finland's economy. (Photos By Lucian Perkins -- The Washington Post)

"The Finnish model could offer some elements of a way out of the European crisis," said Pekka Himanen, a 31-year-old philosopher and co-author of a much-discussed book about Finland's successes.

Not that Finns have all the answers. Like all Europeans, they are producing too few babies to pay the promised welfare-state benefits to an ever-growing contingent of senior citizens. The new jobs created by their high-tech successes have been matched by losses from low-tech plant closures, so unemployment remains high -- about 10 percent.

Nevertheless, the Finns know they are much better placed now than many of their Old Europe neighbors to the south. Exploiting their small size (5.2 million people) and ethnic homogeneity, the Finns have proven themselves successful experimenters and innovators.

Fifteen years ago, Finland faced a full-scale depression, brought on by the loss of the country's most important markets as the Soviet Union disintegrated. Unemployment soared to 20 percent. But the Finns took control of their future, made painful adjustments and came out of the crisis with an economy that the World Economic Forum in Davos, Switzerland, ranks as the most competitive in the world.

The major economies of the E.U. are growing too slowly -- and their elderly populations are growing too quickly -- to preserve the traditional welfare state and provide adequate jobs today, or to offer the prospect of genuine competitiveness in the global economy tomorrow, many Europeans agree. In this view, the countries invest too little in education, research and development and do too little innovating. But there is no consensus on a course of action to fix these problems. Many people worry about preserving a social system that is rich in benefits for all.

"Right now," said Himanen, the young Finnish intellectual, "Europe is like a once-fit top athlete who has fallen out of shape. Instead of taking action, the athlete keeps writing new strategic plans on how to get back into shape: 'I could go running, I could go swimming,' and so on. Sometimes it feels that the European logic is: 'When I'm in better shape, I will start exercising.' "

But "it was actions and not words that created the Finnish model," Himanen added.

Those actions reflected a pragmatic spirit typical of Finland in its brief history as an independent country (Russian control ended in 1917). A relatively backward agricultural country became a high-tech powerhouse with labor productivity as good or better than that in the United States, but also a welfare state as generous as any in Europe.

Perhaps the most revealing statistic behind this transformation is Finland's commitment to research and development. The Finns put 3.5 percent of their domestic product into R&D last year, second in the world to Sweden (about 4.3 percent) and far ahead of the United States (about 2.6 percent) or the E.U. as a whole (less than 2 percent).

R&D expenditures symbolize the Finnish resolve to preserve a comfortable place in a globalized world for an underpopulated nation with thousands of lakes and billions of trees. Typically, the decision to spend so much on scientific research and the adaptation of its results to commercial purposes was the result of a broad political consensus. Finland steadily increased government spending on R&D throughout the 1990s, when all other spending was either cut or frozen.

Three Finnish institutions channel this money. One is a unique body called Tekes, the national technology agency. It supports both basic and applied research, granting about 40 percent of its funds to universities and other research institutions and 60 percent to businesses.

This year, according to Veli-Pekka Saarnivaara, the president of Tekes, the organization will give out nearly $540 million, or more than $10,000 for each Finnish citizen. A U.S. agency investing a comparable amount per capita would put $300 billion a year into American R&D.

Jura-Pekka Tolbanen uses his cell phone to take a picture from the top floor of the Jyvaskyla Science Park. Such research and development projects have helped remake Finland's economy.

Tekes is an entirely autonomous agency funded by the Finnish government. This "quite special" arrangement, as Saarnivaara put it, reflects one factor that sets Finland apart from many other industrial democracies -- Finns trust their government. Visitors from other countries who express admiration for Tekes tell Saarnivaara that such an operation would be impossible in their countries "because of the corruption," he said in an interview here.

The second source of the agency's independence is its reputation as a wise and discreet investor. For 20 years, Saarnivaara said, the agency has worked closely with private firms, helping them decide where to place their R&D bets, working collaboratively to identify markets and products, persuading Finnish universities and research organizations to collaborate with business.

"We are helping to plan R&D projects that we will then fund," he said. About a third of the projects Tekes funds fail completely, Saarnivaara said. He would like that percentage to be higher -- in other words, he would like to take more risks.

A second Finnish institution that supports the research and development efforts is Sitra, the Finnish National Fund for Research and Development, founded in 1967. Its budget is just a tenth that of Tekes, but its impact on Finnish business has been enormous. It acts as a venture capitalist, investing money earned by its own $750 million endowment in the start-ups and new ventures of established companies.

Sitra is run by Esko Aho, who was Finland's prime minister during the crisis years of the early 1990s and was nearly elected president in 2000.

Sitra's endowment came largely from a block of shares in Nokia that the government acquired in return for its support of the company's cell phone enterprise when it was in its infancy. Nokia was "a miracle," as Aho put it in an interview.

Since making a major commitment to telecommunications in the early 1990s, Nokia (a Sitra client itself) has grown into the world's leading cell phone maker. Its $35 billion in annual sales drives the Finnish economy.

Sitra, too, is politically autonomous. Revealingly, more than 90 percent of the companies in which Sitra has invested were previously supported by Tekes, an example of how Finland has become what Himanen and his co-author, Manuel Castells, a Spanish-born sociologist, call "a network society."

A third important source of R&D funding is the Finnish Academy of Science and Letters. Until Reijo Vihko became its president in 1996, it was a clubby organization that channeled research funds to established scientists and labs without much regard for how good they were. Vihko, a former medical professor, turned the academy upside down, according to several Finnish scientists.

"The main point was to concentrate on centers of excellence," Vihko said in an interview. That meant giving money to the best scientists with the most promising projects and cutting off others whose work wasn't getting anywhere. Many of the latter were prominent people with good connections in government and the news media, Vihko said. They orchestrated a lot of criticism of his changes.

Sirpa Jalkanen, director of the MediCity Research Laboratory at Turku University and one of 26 "professors of the academy" in the country, a title reserved for the finest scholars, said Vihko's reforms brought an entirely new spirit to Finnish science. "There's a lot of enthusiasm, much more money," she said. The academy and other funders of basic research "are really supporting science at an international level."

Vihko's victims -- many of them prominent older members of the scientific community -- were furious, she said, but "Reijo is a person who is afraid of no one." In a lesson for Old Europeans who contemplate undertaking comparable reforms in their societies, Jalkanen said she learned from watching Vihko that proponents of fundamental change "get so much opposition, you have to be very strong and really believe in what you are doing."

The Finnish Academy now provides about $240 million annually for basic science in Finland.

Funding from public institutions constitutes only about a third of R&D expenditures; the rest comes from businesses. This, according to numerous Finnish business leaders, reflects the consensus in society that only by staying ahead intellectually and technologically can Finland hope to sustain its standing as one of the world's most successful countries.

Finland's ability to perform with the best in the world also depends on its educational system, widely recognized as the finest in Europe. It, too, was reformed under the leadership of one forceful personality, Erkki Aho, supported by key political leaders and, ultimately, a strong consensus in the society. Aho, now 68 and retired, was director general of the Finnish National Board of Education.

Finns are proud of their accomplishments over the last generation, when their country largely reinvented itself. But with characteristic modesty, they shy away from a visitor's suggestion that Old Europe can learn from their example. "Italians aren't linear thinkers like us," observed Finland's ambassador to the United States, Jukka Valtasaari, interviewed in Washington, "and the French are a melting-pot country" far different than the homogeneous Finns.

But a bigger difference may be the Finns' willingness to change. Today, Finns talk nervously about whether the country can reinvent itself once again in the next 30 years or so. Some fear complacency. "The perception is we don't have to change right now," said Risto Siilasmaa, 39, president of an Internet security firm called F-Secure that he founded in 1988.

Esko Aho, the former prime minister, said he is worried that "people are so satisfied with the present. We can turn out like France and Germany today if we aren't careful. We have to wake up now before it is too late. It's time to rethink our national strategy again."

Staff researcher Robert Thomason in Washington contributed to this report.

Source from http://blogs.washingtonpost.com/finlanddiary/

China, US hold first strategic dialogue

2005-08-07T21:23:00.000+02:00

China and the United States started their first strategic dialogue in Beijing Monday morning, aiming to facilitate bilateral relations.

The closed-door dialogue, the first senior level meeting of its kind between the two countries, was co-chaired by Chinese Vice Foreign Minister Dai Bingguo and US Deputy Secretary of State Robert Zoellick, who arrived in Beijing Sunday.

Chinese Premier Wen Jiabao met with Zoellick on Sunday, and they exchanged views on Sino-US relations and international issues of common concern, according to Chinese Foreign Ministry.

During his stopover in Hong Kong on Saturday, Zoellick said he would discuss "strategic issues of common interest" like foreign policy and economics with senior Chinese officials in Beijing.

The dialogue came as a result of the consensus reached between Chinese President Hu Jintao and US President George W. Bush during the Asia-Pacific Economic Cooperation (APEC) Summit in Chile last year. The dialogue may take place twice a year.

The dialogue is a new height in Sino-US relations,following recent frequent high-level visits and exchanges between the two countries.

The two nations tend to prefer negotiations to confrontations in tackling their conflicts and differences.

China and the United States have agreed to continue their consultations to seek solution to the textile trade disputes as the United States imposed limit on Chinese clothing on accusation of a surge of imports.

The annual session of the Joint Committee on Commerce and Trade (JCCT) was held on July 11 in Beijing. The two sides agreed to set up cooperation mechanisms on cross border prosecutions for intellectual property rights (IPR) violations and on the protection of movie copy rights.

Zoellick said the discussions with Chinese officials would enable the two countries "to get a better sense of one another's interests: where there are points of mutuality--and I believe there are many; how to work cooperatively; but also, where we have differences, how best to try to manage them."

Zoellick is another important member of the Bush administration to visit China within merely a month, following US Secretary of State Condoleezza Rice,Trade Representative Rob Portman, Secretary of Commerce Carlos Gutierrez and Secretary of Agriculture Mike Johanns.

Tangjiaxuan visited the United States last week, to discuss the Korean Peninsula nuclear issue and make preparations for Chinese President Hu Jintao's US visit in September.

The constructive relationship of cooperation between China and the United States will continue to grow through increasing dialogue, building mutual trust, promoting cooperation and handling differences properly, said Tang in a meeting with Rice last Wednesday.

The United States attaches importance to high-level exchanges and dialogue between the two countries, which is helpful for the two nations to have an in-depth exchange of views on major world and regional issues, Rice said.

The dialogue coincides with the fourth round of six-party talks on Korean Peninsula nuclear issue now under way in Beijing,which is one of the issues both countries cooperate effectively.

The new round of six-party talks entered an unprecedented seventh day on Monday in Beijing, and negotiators are working on the first ever joint statement of the talks.

Source: http://english.peopledaily.com.cn/200508/01/eng20050801_199503.html

China: 3-week break not to dampen six-party talks

2005-08-07T21:06:00.000+02:00

BEIJING, Aug. 7 -- All the six parties to the fourth round of the Korean nuclear issue talks agreed to take a recess and resume the talks in the week that begins on Aug. 29, China's chief negotiator Wu Dawei said in a chairman's statement read at a press conference on Sunday morning.

All the six delegations decided to have a brief recess so that they can go back to report to their respective governments, study further each other's positions and resolve differences which still exist.

"The specific date of when the talks would resume is yet to be set," Wu said.

During the break, all the parties will keep contact and continue consultations, according to Wu.

Wu said at the press conference following a chief delegates' meeting that the general goal of the six-nation talks is to achieve the denuclearization of the Korean Peninsula in a peacefulmanner.

"This is the consensus reached by the six delegations," said Wu, also Chinese vice foreign minister.

Since the fourth round of the talks began 13 days ago, the six parties have been working on a roadmap for the denuclearization ofthe Korean Peninsula.

"If we are climbing a mountain, we've already seen the peak of it. Now we decide to take a recess so that we can reach the peak more smoothly," Wu said, adding "This is a positive outcome of thefirst phase of the current round of talks."

Wu said he did not think a three-week break would dampen the momentum of the current round of talks.

Wu Dawei (R), Chinese chief negotiator shakes hands with Christopher Hill, head of the United States delegation.

Wu Dawei (R), Chinese chief negotiator shakes hands with Christopher Hill, head of the United States delegation after the chief negotiators' meeting at the Diaoyutai State Guesthouse in Beijing, August 7. (Xinhua photo)

He said the six nations have reached a lot of consensuses during the first-phase of the current round of talks on the basis of the previous three rounds.

"Doubtless, there are still differences in some important issues among the delegations," Wu said. "But the fact that they agreed to resume the talks three weeks later demostrates we do notfear the differences."

Wu said, "whether or not a common document will come into beingdoes not necessarily be considered an indicator to measure whetherthe talks is a success or a failure."

The basic principles of the six-way talks is to reach consensusthrough consultations, Wu said. That is to say, "all the delegations should reach agreement on all issues involved, and anyside of the six has a veto," added Wu.

"Concerns of any of the six should be those of all parties. Only when we resolve all concerns of the six parties, can we reachan agreement." This increases the difficulties for us to reach consensus, Wu added.

He also expressed the belief that the six parties would one dayreach an agreement on the common document for the Korean Peninsulanuclear issue.

Wu told the press conference he could not say for sure when thesix parties would reach the agreement.

"I can neither ensure the six parties will reach the agreement after the fourth round of talks resumes" late this month.

"But I believe that one day they will eventually reach the agreement."

In response to the question of including abduction issue into the six-party talks, which was raised by a Japanese reporter at the Sunday's press conference, Wu said the six-party talks focus on the denuclearization of the Korean Peninsula, and other issue could be resolved through other channels.

This is the consistent stance of the Chinese side, which has also been respected and understood by the Japanese side.

The first phase of the fourth round of the six-party talks was held in Beijing from July 26 to August 7, involving China, the Democratic People's Republic of Korea (DPRK), the United States, the Republic of Korea (ROK), Japan and Russia.

According to Wu Dawei, the six parties, in the spirit of mutualrespect and equality, held serious practical and in-depth discussions and consultations in a good atmosphere on the goal of the denuclearization of the Korean Peninsula, which led to better mutual understanding, broader common ground and positive progress.

DPRK's chief negotiator Kim Kye-gwan said here Sunday that theUnited States must change its position on requiring his country toabandon all its nuclear programs.

It's the key to the success of the next-stage six-party talks, Kim said at a press conference in the DPRK embassy in Beijing after the six parties agreed to have a three-week recess.

The first stage of the fourth round of the six-party talks laida foundation for progress in the next stage, and delegates reacheda consensus on the goal of denuclearizing the Korean Peninsula andreaffirmed the principle of "word for word, action for action", Kim said.

He ascribed the failure to issue a common document mainly to the "major differences" between the DPRK and the United States on the definition of denuclearization.

The DPRK does not want to give up its right to use nuclear power peacefully while the U.S. "attempted to keep the DPRK from the right," he said.

The denuclearization cannot be realized by the DPRK alone, and the United States and the ROK should also take actions, said Kim, also vice foreign minister of the DPRK.

He added that his country is ready for more bilateral contacts and hoped the United States could change its position on requiringthe DPRK to abandon all its nuclear programs, including peaceful use of nuclear energy.

Kim said it's very important for the United States to remove its nuclear threat against the DPRK, which has prompted the DPRK to develop nuclear weapons.

He urged the United States to dismantle the nuclear weapons in the ROK and agree to receive verification.

US chief delegate Christopher Hill said here Saturday night that the US government is absolutely dedicated to finding a solution to the Korean nuclear issue, although it is not easy.

"We tried very hard to reach an agreement and we have great political will to resolve the issue," he said.

He noted that what all the parties have tried to do is to reduce the differences and to understand with great precision whatthose differences are.

The six-party talks is considered a diplomatic mechanism to seek ways to resolve the Korean Peninsula nuclear issue in a peaceful manner.

The previous three rounds of the talks were here since 2003, also hosted by China at Daiyutai, a quiet compound occupied by villas and lakes in the Chinese capital, but no substantial progress was made.

The re-opening of the talks, after a 13-month-long impasse, used to rekindle the hope for a breakthrough in the nuclear dismantlement deadlock.

This is the richest Chinese young man, Liyanhong, CEO of Baidu.com

2005-08-05T22:22:00.000+02:00

Chinese 'google' baidu.com went to Nasdaq Stock Market today

2005-08-05T21:55:00.001+02:00

Baidu.com's Shares More Than Triple

SAN FRANCISCO - Baidu.com Inc.'s shares more than tripled in their stock market debut Friday as investors scrambled to buy an early stake in a Chinese-language search engine that's hoping to become its country's equivalent of Google.

The Beijing-based company's shares soared as high as $99.50 on the Nasdaq Stock Market after being priced at $27 in an initial public offering completed late Thursday. After the initial buying stampede, the shares settled back to $90.35 in early afternoon trading.

At that price, Baidu's market value stood at $2.9 billion — a lofty appraisal for a 5 1/2-year-old company that only recently became profitable. The company earned $1.8 million on revenue of $13.6 million during the first half of this year.

Investors are betting that Baidu's search engine might turn into a moneymaking machine if it can emerge as an Internet hub in China, where most of the country's more than 1 billion residents still aren't surfing the Web.

As China's early search engine leader, Baidu's growth potential often is compared to Google, which has turned into a cultural and financial phenomenon less than seven years after its incorporation.

With its stock worth three times more than its own IPO nearly a year ago, Google's market value now hovers around $85 billion.

Like Google, Baidu — pronounced "by doo" — so far has made most of its money from text-based ads that are tied to search requests and generate a commission whenever the commercial links are clicked upon.

Although its business model mirrors Google, Baidu faces different challenges.

China's Communist government and its history of censorship poses one of the biggest potential stumbling blocks.

In 2002, the government shut down Baidu for a week and fined the company for producing search results with content considered "socially harmful," according to

Securities and Exchange Commission documents.

Requests for MP3 music files account for 21 percent for Baidu's search requests, a frequency that already has provoked two lawsuits for alleged copyright infringement.

But even Google apparently likes Baidu's potential, having invested $5 million in the company last year. Google's 2.6 percent is now worth $67.7 million.

With ambitions to become a bigger player in China, Google also represents a significant threat to Baidu. Two other search engine powers, Yahoo Inc. (Nasdaq:YHOO - news) and Microsoft Corp., also have designs on China.

Baidu was founded by two engineers, Robin Li and Eric Xu, who at one time went to school and worked in the United States.

Li, who received his master's degree in computer science from the University of New York at Buffalo, is the company's chief executive officer and owns a 25.8 percent stake worth nearly $700 million. Xu, who received a doctorate from Texas A&M, no longer works at the company.

Baidu's biggest shareholder is a Silicon Valley venture capital firm, Draper Fisher Jurvetson, whose 28.1 percent is worth $740 million.

My manager in Flextronics Oulu, Sakari Nokela and me

2005-08-02T08:46:00.000+02:00

Near my apartment

2005-08-02T08:41:00.000+02:00

In the office

2005-08-02T03:08:00.000+02:00