China overtakes US as world’s top car market
February 11, 2009
CHINA overtook the United States as the world’s largest auto market for the first time when it sold more cars, 735,500 units, in January, the China Association of Automobile Manufacturers said yesterday.
But the January figure was a drop of 14.35 percent year-on-year and this indicated that sentiment in China’s auto industry is still in a downtrend because of a global financial crisis. Analysts, however, agreed that the market showed signs of an early recovery with government support and lower fuel prices.
Vehicle sales in China rose 6.7 percent to 9.38 million units last year. Sales may grow 5 percent this year, the slowest pace since 1998, CAAM said earlier.
January vehicle sales in the US plummeted 37 percent to 656,693 as more auto makers closed down plants and laid off thousands of workers.
The association reports said China’s passenger cars dropped 7.77 percent to 610,000 units last month, following a 12-percent slump in December
But the slower drop in sales was helped by the central government’s measures such as cutting fuel prices and halving a vehicle sales tax on small cars to counter a slump in the automotive industry since August last year.
“The fuel tax reform and tax cuts work effectively as sales of vehicles powered by 1.6-liter engine or less enjoyed rapid growth from a month earlier,” Zhu Yiping, a director at CAAM, said. “This helped passenger car makers to cut inventory by 80,000 units.” He added that the overall stockpile of Chinese car makers also hit its 13-month low.
Selling commercial vehicles remained tough due to the economic situation as their sales plunged 36.46 percent to 125,100 units in January, CAAM said.
China announced a 4-trillion-yuan (US$586 billion) economic stimulus package and favorable policies including tax cuts and road-toll abolishment in January to spur demand.
However, most analyst cautioned that the sales pickup won’t last long and they remain skeptical that China would remain the world’s biggest car market for the year.
“We should not be too optimistic as the impact of favorable policies may be weaker as time goes on,” said Rao Da, secretary general of China Passenger Car Association. “Sales of vehicles with engines larger than 1.6 liters are not expected to boom and overall sales will still be hampered by a weak economic outlook and lower exports.”
Source: Shanghai Daily
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China Auto Industry 2008
January 22, 2009
Shanghai Daily Newspaper is publishing auto industry stories of the 2008. Here is one of them you can read on:
THE impact of the global financial crisis on the auto industry has been growing since the second half of last year.
China stepped up a series of efforts to defy the economic downturn and spur domestic consumption, sending positive signals to the industry.
Fuel tax reform is the latest government effort to direct the automotive industry toward greener and more energy-efficient methods.
The struggling US auto industry is also teaching Chinese counterparts that more attention should be placed on small cars and new-energy vehicles.
China lost its first dispute since it entered the World Trade Organization in 2001 when tariff policies on auto parts drew criticism from western car makers.
Shanghai Daily previously highlighted the first five of 2008′s top 10 auto industry stories. Today, we publish the remaining top stories of the year. Read the restof article : Lessons to be learned from the US …
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China Reduces Import Taxes on Equipment Spare Parts
September 17, 2008
16 September 2008-China has reduced import taxes on spare parts of large equipment in an effort to aid domestic manufacturing.
Taxes paid by domestic manufacturers of large equipment for imports made after Jan. 1, 2008 will be refunded. These include key spare parts of large equipment such as ultra- and extra-high voltage transmission equipment and transformers, large petro-chemical equipment and large coal-chemical equipment.
The government has also canceled the import tariff exemption on some complete sets.
The tax exemption does not apply for the approved importation of some complete sets of equipment by domestic and foreign-funded projects made after Sept. 1.
On the other hand, imports of such equipment by enterprises approved before Sept. 1 will continue to enjoy previous tax policies until March 1,2009.
Source:Xinhua
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Arbitration in China
September 7, 2008
China’s law system allow disputes to be resolved in mechanism of arbitration. Â Here you can read the basics of arbitration in China :
The Basics of Arbitration in China    (Source: China Briefing Magazine)
Arbitration on contracts involving a Chinese party is a concern for international counsel and overseas-based lawyers. Chinese parties will usually insist upon the clause in contracts, which can be a good thing, as no one wants to see disputes end up in courts if there is another way to resolve matters.
Moreover, arbitration is advantageous regarding the possibility for the parties to choose a judicial body with trusted arbitrators. The dispute can be solved by a simplified procedure on which the parties have influence. The chosen arbitrators can be experts, a competence ordinary courts sometimes lack. Arbitration is also less time consuming than court procedures and cases are normally resolved within 6 to 9 months.
An arbitration award once issued is considered final. It becomes enforceable and stable; subject to recourse only by court action. Arbitration is not restricted to national jurisdictions and gives the parties the possibility to avoid the disadvantages and expenses of going abroad.
It also has the advantage of being confidential which avoids souring relations between two parties and helps maintain good business relations given that they both submitted to this type of dispute settlement voluntarily.
Not surprisingly, some overseas lawyers have a marked distrust for Chinese based arbitration and want to see cases resolved in overseas jurisdictions instead. It is difficult to obtain the Chinese side’s mandate for this but there are also legal difficulties. Following the Chinese law, contracts in certain industries that involve a Chinese party must be heard by a specific Chinese arbitration body experienced in the field.
There are no exceptions to the rule. Parting from Chinese jurisdiction will be equal to breaking the law and will have far more serious consequences for the rest of the contractual agreement.
Some overseas lawyers are afraid that Chinese arbitration cannot be trusted and lacks impartiality. That attitude, although historically correct, is already outmoded. In the past five years, China’s arbitration courts have been filling with both lawyers and industry experts familiar with the field, thus dramatically improving basic dispute resolution. Disputes will arise as a matter of business and China’s arbitration mechanism has been coping well.
That said, there is still the question of dealing contractually with standard arbitration clauses – where should the hearings be based and who should hear them?
The settlement of a dispute via arbitration between domestic parties must be held in China. Under Chinese law, foreign-invested enterprises, even wholly foreign-owned one, are considered domestic. Therefore a dispute between FIEs or between a FIE and a domestically invested Chinese company is a domestic one and has to be arbitrated in the country.
A foreign arbitration clause in a contract between such entities will be deemed invalid and the award unenforceable in China. The People’s Courts will still have jurisdiction over the dispute.
While foreign parties prefer to arbitrate abroad; a compromise might be arbitration in Hong Kong instead with its reliable reputation among foreign and Chinese investors. Another alternative could be the International Chamber of Commerce (ICC) or the Beijing Arbitration Commission (BAC).
The ICC will be able to assist as it is an organization recognized by Beijing with an affiliate office in the city. In addition, the ICC has an Arbitration Commission, which is governed by dispute mediation protocols laid down according to international law.This arrangement can satisfy both ways: Chinese parties wanting arbitration based in the country and the foreign parties wanting an impartial internationally recognized body out of reach from perceived political interference.
On the other hand, the BAC is a permanent organization providing a forum for arbitration of disputes associated with contractual and other property rights based on its Arbitration Rules. It is established in accordance with the Arbitration Law of the People’s Republic of China and accepts domestic and foreign-related disputes.
China is also signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards which requires the courts of the contracting states to give effect to agreements to arbitrate and accordingly recognize and enforce arbitration awards from other contracting states.
The convention applies awards which are not considered to be domestic ones in the state where recognition and enforcement is sought. Although enforcement in China is not easy, a refusal to enforce a foreign arbitral award by a lower court requires the confirmation by the Supreme People’s Court to be effective. As for the special administrative regions of Hong Kong and Macau, awards are enforceable under special bilateral agreements similar to the latter.
The common arbitration route for foreign investors seeking to solve a domestic dispute is through the China International Economic and Trade Arbitration Commission (CIETAC). The CIETAC has headquarters in the capital and sub-commissions in Shanghai and Shenzhen while also being officially affiliated with the Chinese government.
CIETAC offers domestic, foreign-related and international arbitration. It administrates a panel of more than 250 approved foreign arbitrators including arbitrators from Taiwan, Hong Kong and Macau. Majority of them are experienced in China and their respective fields. Arbitration may be conducted in Chinese, English, or another language, although it might be difficult to convince a Chinese party to agree to conduct the process in another language other than Chinese.
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Privately-Owned Companies in China Plans to Enter Overseas Markets
September 5, 2008
Here is interesting survey conducted by Fudan University on behalf of HSBC. According to the Survey, more than 40 percent of private companies in China are planing to enter overseas markets by exporting their products:
Overseas markets a lure
MORE than 40 percent of Chinese privately-owned enterprises are planning to break into overseas markets in the next three years, an industry survey found yesterday.
Fudan University, on behalf of HSBC, surveyed 1,000 of these firms, mainly in the Yangtze River Delta and Pearl River Delta in the first half, HSBC said yesterday.
Based on survey data and related models, the research indicated that 700,000 POEs nationwide had overseas expansion plans.
The respondents are from manufacturing, wholesale and retail, and information technology industries.
The research showed that among the 43 percent surveyed POEs with overseas expansion plans, 63 percent intended to establish sales networks.
The survey also found 55 percent of respondents had overseas economic and trade activities, including exporting their own products, selling products overseas via trade agents and setting up joint ventures with overseas firms.
POEs still depend on domestic banks for lending needs when seeking finance.
The survey found about 60 percent of the respondents had no contact with foreign banks.
Respondents also showed increasing interest in foreign banks’ services, such as short-term yuan loans, hedging and merger and acquisition advice, the survey found.
The deciding factors for POEs when choosing a bank for international business are rates for services offered and borrowing costs, the bank’s global reach, brand reputation and specialist expertise.
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