China’s inflation cools at last
October 14, 2008
Inflation rates are crucially important for China’s economy. To me, it is the most decisive indicator in shaping government policies on economy, finance, trade etc.
For example, the soaring inflation at the beginning of the year was the main reason behind the tightening monetary policy which squeezes credits for factories, makes trade policies restrictive, quickens the appreciation of chinese currency. So every company making business with China needs to follow the inflation gadget to foresee possible risks and opportunities.
China’s inflation cools at last
By Lydia Chen (Sanghai Daily)
CHINA’S inflation rate dropped to the slowest pace since June 2007 with smaller gains in food prices, a boost to policy makers working on adjusting macroeconomic policies to support the country’s economic growth.
The consumer price index, a broad measure of inflation, rose 4.9 percent in August from a year earlier, after gaining 6.3 percent in July, the National Bureau of Statistics said this morning.
Food costs, accounting for a third of the CPI basket, surged 10.3 percent year on year last month. Within the category, meat and poultry prices soared 8 percent in August.
The cost of pork, the nation’s staple meat, increased 1 percent last month from a year ago while cooking oil prices rose 22.7 percent. Vegetable prices were down 0.5 percent last month from a year ago. Grain prices gained 8 percent in the period.
The combined CPI grew 7.3 percent from January to August, the bureau said.
Consumer-price inflation has slowed for four months. February’s 8.7 percent pace was the fastest in 12 years. The central bank’s target for the year is 4.8 percent, the same as the actual rate in 2007.
But producer-price inflation advanced 10.1 percent in August after rising 10 percent in July. The August jump was the fastest pace since at least 1996, according to the bureau today.
The faster producer inflation rate may lead policy makers to introduce more balanced measures to boost growth against the risk that inflation will accelerate again.
China may adopt tax cuts, a slower pace of yuan appreciation and more easing of lending restrictions to protect jobs and avoid an economic slump as export demand falters.
China’s economy expanded 10.1 percent in the second quarter from a year earlier, slowing for a fourth straight quarter, as exports cooled. Many economists said the growth may ease to 9 percent this year.
Profit growth for listed companies slumped in the first half, helping push the key stock index in the Shanghai market down nearly 60 percent so far this year. Weaker overseas demand, rising costs and a strengthening currency have put pressure on exporters of shoes, toys and clothes.
Economists expect China’s monetary policy will steadily turn more growth-friendly, given the concerns and moderating inflation.
In July, the central bank eased restrictions on how much banks can lend. It raised the 2008 loan quotas for national banks by 5 percent and for regional lenders by 10 percent, according to reports by the Goldman Sachs Group Inc, BNP Paribas SA, and the China Merchants Bank Co.
The People’s Bank of China has kept interest rates unchanged this year and hasn’t increased the reserve ratio for banks — the proportion of deposits that lenders are required to set aside — since June.
The Chinese yuan has climbed only 0.2 percent against the dollar this quarter after a 6.5 percent advance in the first half. Gains hurt exporters by making their products more expensive and less attractive in overseas markets.
The government has already cut taxes on exports of textiles and garments and encouraged more lending to small and medium-sized businesses. Officials are working on a plan for as much as 400 billion yuan (US$58 billion) in tax cuts and spending to prevent an economic slump, according to economists and reports in domestic news media.
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China, difficult for manufacturers to leave
October 10, 2008
It is being recently told that costs are rising in China, like all over the World. But it is hard to move your sourcing away China. An Article written by Venkatesan Vembu published in DNA India explains why :
“Â Â For all the hand-wringing over the rising cost of sourcing from China, the country’s scale of manufacturing operations, the depth of its supply base and its famed infrastructural advantages make it a difficult country for manufacturers to leave for elsewhere, say economists, business consultants and businessmen.
“Where else but in China can you source the huge quantity of goods that Wal-Mart needs, for instance?” asks Jing Ulrich, chairman of China equities at JP Morgan Securities. Countries like Vietnam and Bangladesh may be able to take some marketshare from China in some industries, but they’re not going to be able to replicate the huge scale of manufacturing that China has built up over the past 30 years, she adds.
China still offers cost advantages in many verticals, points out Richard Brubaker, managing director of China Strategic Development Partners, a Shanghai-based business consultancy. “It’s hard for many manufacturers to leave China because there is no business case to move.”
China’s supply base is huge, and entire industries – such as automobiles and computers – have Tier 1-3 suppliers in place in China, observes Brubaker. “If a particular group decides to move out of China, for whatever reason, it loses out on the scale of support.”
Hong Kong-based garments manufacturer M Arunchalam, who sources from China for the world markets, agrees. Earlier this year, he moved a fifth of his supply lines from China to Vietnam and Bangladesh citing rising wage costs and tighter enforcement of pollution control laws. But even he acknowledges that it is hard for him to go to India, for instance, and replicate his China model, given the limitations of infrastructure there.
“If I want to make 2 million pairs of jeans and I have the fabric, I may go to Chennai, but I cannot wash it because there is no water,” says Arunchalam. “The entire processing industry is dying in India because of inadequate infrastructure.”
Ulrich notes that China remains a competitive producer of many goods, but that it feels the need to exit low-end manufacturing industries such as textiles, garments and shoes, which operate on thin margins. “In low-end manufacturing, which is labour-intensive and materials-intensive, China is not going to be as competitive as it once was.”
China, she adds, is looking to move up the value chain into machinery manufacturing, including high-end goods and telecommunication equipment. “This is where the bright spots will be.” And in these high-end industries, especially machinery equipment, China is beginning to command higher marketshare globally, she points out.
“If you take a look at China’s overall composition of exports, nearly 50% of it this year will be in the machinery sector. This is clearly where China’s overall competitiveness lies.”
Going forward, she says, she expects China to take on global players in their home markets. “Who knows, years from now, Chinese high-end machinery equipment may be sold in Germany, the US and Japan, not just in emerging markets.”
In that context, says Ulrich, moving elsewhere is not a solution for manufacturers.
In any case, Brubaker points out, many firms are not manufacturing in China solely for export. “Many of them are now manufacturing for the China market and are doing very well in that endeavour. For them to move to another country would not only add costs to bring those goods to the China market, it would also create higher barriers.”
And then, says Brubaker, there’s the comfort factor. “China is a known place: firms have already negotiated and closed their deals here. To start over in a country like India or Vietnam would be a long-drawn process where relationships would need to be established, deals negotiated, staff hired and capacity developed.”
Article by DNA India: Why China is so hard to leave
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China Releases Implementation Regulations for Labor Contract Law
September 27, 2008
More than eight months after the Labor Contract Law came into effect, China’s State Council has released implementation regulations to clarify certain aspects of the new law. While the labor law was hailed as a landmark step in protecting employee’s rights, many complained it only served to increase a company’s operational cost.
A brief rundown of the new regulations:
-If an employee fails to sign a written labor contract with an employer within one month after commencing work, the employer can terminate the contract with the employee by written notice. Under this circumstance, the employer only needs to pay the salary for the period of work.
-If the employer fails to sign the written contract with the employee within one month, not due to the unwillingness of employee, the employer shall be liable to pay double salary for the period without written contract. The said period starts from the first day after the allotted one month since the employee begun work.
-The law says that if the employee has worked for the employer for over 10 years continuously, the employer shall sign open term contract with the employee for as long as he requires. According to the implementation regulations, the 10 year period is counted from the date the employee started worked for the company and include the time prior to the implementation of the law. This regulation renders the effort of certain companies to terminate and re-employ its employees at the end of 2007 useless.
-If the employer wants to close the company and transfer its employees to another company under the same group, how do we then calculate for the service years? Under the implementation regulations, there are two options. The company can either convert its employees to the other company, including the calculation of his previous years of service or pay compensation according to the law and then re-employ the employee without the calculation of his years of service.
-On the subject of compensation, the implementation rules were clarified. For instance, in an employment contract that expires upon completion of task, the employer shall be liable to pay the employee severance pay based upon the service term only.
The implementation regulations includes six chapters and 38 clauses to make the Labor Contract Law more effective. It details rules for terminating a labor contract, disposition of labor, and legal liability, to name a few.
Source:China Briefing
BY Cathy Gao, a business advisory service associate with Dezan Shira & Associates.
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Lack of port logistics causes annual loss of US$1.7bil
September 27, 2008
Vietnam faces an extra cost of more than US$1.7 billion as the lack of port logistics leads local companies to have their shipments transshipped via ports in Hong Kong and Singapore.
The country now had 114 seaports, most of them small, and that only 14 were considered internationally moderate such as Haiphong, Cat Lai and VICT, but they were only riverports.
Nguyen Tuan Hoa, deputy director of the Development Study Center under the HCMC government, said total throughput at Vietnam ports amounted to about 178 million tons, including 4.3 million TEUs.
Logistic fees in developed countries are much higher than in developing countries like Vietnam, said Hoa, who has been joining hands with other scientists to undertake a study on logistics development in HCMC.
He said logistics expenses in the United States made up 9.5% of GDP, 11% in Japan, 16% in South Korea, 21.6% in China and 25% of GDP in Vietnam.
Vietnam’s spending on logistics services last year totaled about US$17 billion while GDP was US$71 billion, he said at an international conference on logistics risk management in HCMC last Thursday.
He said logistics played a major role in the economic development of a country which depends heavily on exports.
There are 800-900 businesses active in the logistics field but a majority of them are in HCMC where the logistics market has a yearly value of US$12 billion, 60% of the country’s total, while 70% of import and export shipments transit through HCMC.
Le Van Bay, an expert in logistics at the HCMC University of Technical Education, said most logistics services companies in Vietnam were not yet specialized, thus lacking professionalism.
Hoa said the country now had 114 seaports, most of them small, and that only 14 were considered internationally moderate such as Haiphong, Cat Lai and VICT, but they were only riverports.
“We are lacking deep-water ports serving as international transshipment points, so Vietnam’s exports are transshipped to Hong Kong or Singapore before heading for foreign markets,” said Hoa.
Consequently, for every container of Vietnam’s export goods, local businesses have to pay an extra charge for transshipment of US$400.
Shanghai Daily
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Need a parking place? Good luck
September 6, 2008
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“You always hope it will be better,” said Bracey, who ended up parking a half-mile from the shop where he was buying a gift for his brother.
This month, millions of Americans could find themselves in a similar predicament, fruitlessly orbiting packed parking lots in shopping centers, malls and downtowns as the holiday shopping season builds toward a peak.
They are the victims of a growing national parking crunch, the product of ever-increasing numbers of cars and scarcer places to put them in many cities.
In the past four decades, the number of registered vehicles has risen nearly 170% and the ranks of licensed drivers have doubled, Federal Highway Administration figures show.
The infrastructure is struggling to accommodate the crush. Many cities are experiencing downtown rebirths with new condos, hotels and office buildings, but the amount of parking on streets remains largely a fixed asset.
The value of parking in a tony urban neighborhood can be seen dramatically in Boston, where spots can be sold. An anonymous buyer bought a space in a Back Bay alley for a record $250,000. Prices for downtown spaces are up 14% this year over last year and have almost doubled since 2001, according to Listing Information Network, which tracks Boston real estate trends.
Parking structures aren’t always the solution. Although 2.8 million parking spaces were built in structures from 1996 through last year, the number of construction starts fell from a peak of 465 in 2001 to about 405 this year, says Dale Denda, research director for Parking Market Research in McLean, Va.
Part of the reason for the reluctance to build new parking structures is cost. Construction costs alone are up more than 35% in the past six years to an average of about $13,900 a space. That doesn’t include the soaring price of urban land.
“The world has changed,” says Donald Shoup, an urban planning professor at the University of California at Los Angeles and author of The High Cost of Free Parking, which advocates letting market forces set on-street parking rates as a way of revitalizing cities. “We’re realizing that the new parking is wildly expensive and hard to pay for.”
Some planners are starting to look to technology for help. Borrowing ideas from Europe, they’re coming up with solutions such as robotic garages that whisk cars around on metal pallets, and parking spots reserved by cellphones or found through in-car navigation screens.
‘Find alternatives’ to parking
Some cities are trying to wean themselves and their residents away from the driving that requires more parking. Instead, they’re plotting to lure shoppers, diners and workers onto public transit, bikes or their own feet.
“There are cities all across the country that are actively saying, ‘We want to limit the amount of parking we provide,’ and, ‘We want people to find alternatives,’ ” says David Fields, senior planner for Nelson/Nygaard Consulting Associates in New York.
Even shopping centers and malls, traditional homes to expanses of free parking big enough to be their own small countries, are trying new ideas to ease parking hassles for their customers. Westfield, a big shopping center operator, has close-in spots for expectant moms at all its 59 properties. The lines are painted pink.
It’s also experimenting with call-ahead reserved parking, preferential paid parking in a gated lot and a parking shuttle at various California centers.
General Motors is sponsoring valet services at two malls, Phipps Plaza in Atlanta and Town Center at Boca Raton in Florida. Cadillac drivers get free valet parking at both. At Town Center, so do Saab and Hummer owners.
But even when valet parking is available, some people are reluctant. Hector Rodriguez, 40, a Los Angeles hair salon owner, says he hesitates to hand the keys to his customized Chrysler 300C to an attendant. “I don’t want people driving my car.”
In car-dependent Los Angeles, the time it takes to find a parking spot on the street has doubled in the past five years, estimates Shanette Madden, 40, a Los Angeles property manager. She pulled her Nissan Versa into a no-parking zone and sent her daughter Malika, 16, off on an errand along Melrose Avenue one Sunday afternoon. She says she had hunted for 15 minutes to find a metered space, then gave up. Parking is not only hard to find, she says, but becoming more expensive. “It’s just like gas (prices). What can you do?”
Bracey, 40, pausing as he hoofed back from the shop, says he won’t even venture into Santa Monica, the affluent, liberal enclave to the west where the popular outdoor mall is rimmed by often-crowded parking structures.
Santa Monica is one of those communities that knows it has a problem and is trying to find a solution. Last month, it started a website, www.parkingspacenow.smgov.net, that gives the availability of spaces in 14 downtown lots and garages. It’s updated every five seconds.
“The city doesn’t really like parking,” says Lucy Dyke, Santa Monica’s transportation planning manager. It “doesn’t want to waste money on parking spaces we really don’t need.”
Instead, the Web page is aimed at making better use of spaces, encouraging people to find other means to get downtown when lots are full.
New solutions
The rebirth of downtowns and resulting crunch, combined with new electronic devices, are leading to a “parking technology revolution,” says Dennis Burns, vice president of consultants Carl Walker.
Some of the ideas include:
•Automated parking. Think of a vending machine in reverse. In automated parking, motorists drive their cars onto a steel plate in a garage and get out of the car. The plate is then whisked away like a pallet in a warehouse, all robotically, to a parking space.
“Your car can never be stolen or dented,” says Lee Lazarus, president of A.P.T. Parking Technologies in New York.
Eliminating ramps, walkways — even lowering the ceiling — allows a developer to dramatically reduce the size of the structure. It can pack almost double the number of spaces of a conventional garage, Lazarus says.
While they’re popular in Europe, the USA so far has only a few automated garages, including a 312-space garage in Hoboken, N.J., and a 74-space structure in Washington, D.C.
While they free vital space in a building that can be used for people instead of cars, automated parking is expensive, at more than $20,000 a spot, Lazarus says.
•Finding parking through in-car navigation. XM Satellite Radio is one of three companies working to develop a system that would allow the navigation screens in vehicles to be used to hunt down available parking spots. XM is working with one of the nation’s largest parking providers, Standard Parking, and a technology company, Quixote Transportation Technologies. The system would use color-keyed icons to show how many spots are available in a garage or lot.
•Reserving by cellphone. A company called MobileParking is developing a system in which drivers can call ahead on their cellphones to reserve parking spots. Early next year, MobileParking hopes to create a network of 3,100 parking structures in the 30 biggest U.S. cities where drivers can call or message ahead. In some cases, parking attendants will rope off a special area for MobileParking customers, says President Jason Boseck.
In addition to the parking charge, customers will pay a $1.75 service fee.
•Paying by cellphone. Rather than having to run out to feed the meter, motorists who park at one of about 90 spaces along the famed Sunset Strip in West Hollywood, Calif., can arrange to get a call on their cellphone asking them if they want to extend their time on the parking meter.
“You pay for parking and if you want to add time, you can do that with a cellphone,” says Chris Chettle, vice president of Digital Payment Technologies, which co-developed the system.
It works because instead of standard parking meters, the spaces are connected to kiosks — one for every nine spaces — that accept payment by credit card or currency.
So far, though, not many parkers have registered to use the cellphone feature, says Oscar Delgado, the city’s parking operations manager.
A San Francisco company, Spark Parking, is creating a cellphone payment system for garages. Instead of barriers and ticket machines, a parking structure would be open. Motorists would drive directly to an open space. A sensor in the stall would keep track of how long they parked and bill them, says CEO Cooper Marcus.
The system will help give planners a better picture of how lots and structures are used, helpful in setting parking rates.
For every car, three spaces
Higher rates might actually help consumers, he says, by creating more turnover of spaces.
“If pizza was free, everyone would eat lots of pizza. If parking is free, everyone is going to use lots of parking,” Marcus says.
Parking consumes enormous amounts of space.
“Every car needs three spaces: one at home; one at work; and one at play,” says Steve Shannon, president of ParkingMan, a consultancy in Pitman, N.J. “It’s difficult to accommodate all these cars.”
The key appears to be striking a balance of need. In Ann Arbor, Mich., University of Michigan students compete with other residents for coveted parking spaces downtown. At its worst, motorists sometimes can take 10 minutes finding a spot, says Susan Pollay, executive director of the city’s Downtown Development Authority.
The city is studying the parking issue but hopes that parking is only one solution, along with buses, bikes and walking.
“We have become smarter in realizing that parking is not the silver bullet,” Pollay says. Rather, it’s just “a tool in the toolbox” to a total transportation solution.
Source:Â Â Â http://www.usatoday.com
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