No.390 September 11, 2009
Special Issues  
USITO Visits Haier Headquarter On Standards Strategy
USITO-AmCham Shanghai Event in Shanghai on Internet Filtering Software, 9/18/2009
 

Invited by China Association of Standardization and Haier Group, China's largest electronics manufacturer, USITO staff visited the Haier headquarter in Qingdao City of Shandong Province on September 8th. During the one day event, Haier executives first introduced Haier's standardization work, its international standards strategy as well as its global business ambitions. The meeting was followed by a half-day site tour of Haier facilities in Qingdao City.

Top Story

Top Chinese IC Firms' Outcry for No.18 Circular Extension

According to a 9/4/2009 post in SICA website (Shanghai Integrated Circuit Industry association, http://www.sica.org.cn/), seven Chinese semiconductor firms have submitted a joint letter to the Chinese government, crying for extension of the implementation period for the No.18 Circular.

The joint letter, titled ¡°Urgent Report About Requesting Extended Execution of the Preferential Terms in State Council [2000] No.18 Circular¡±, is addressed to the four Chinese ministries: the National Development and Reform Commission (NDRC), the Ministry of Finance, the State Administration of Taxation, the General Administration of Customs, and the Ministry of Industry and Information Technology (MIIT). It was reported that the seven companies submitted the letter on June 15 this year, though the news was only released last week. The seven companies by nature are China¡¯s most important semiconductor companies, namely: Shanghai Hua Hong NEC Electronics Co., Ltd., Semiconductor Manufacturing International Corporation (SMIC), Shanghai Grace Semiconductor Manufacturing Corporation, Taiwan Semiconductor Manufacturing Co., Ltd, (TSMC), HeJian Technology (Suzhou) Co., Ltd., Advanced Semiconductor Manufacturing Co., Ltd., and Shanghai Semiconductor Manufacturing Co., Ltd.

The background for the joint letter is that China began to levy value added taxes (VAT) on imported equipment, materials and components by semiconductor manufacturing enterprises since July 1, 2009. The seven companies argue that, the 17% VAT will be a heavy burden for the enterprises even if it might be returned later, since it will exhaust the companies¡¯ capital resources and accrue greater interest cost. The letter states: ¡°We would never expect that because of the change of our industry policies, IC multinationals will choose to redirect their investment to other countries like Singapore, Malaysia, India, Vietnam and Russia¡±.

The 7-company submission proposes two points: 1. Continue to execute all preferential policies embodied in the No.18 Circular, import-VAT free for imported equipment materials and components; 2. Accelerate the formulation of more preferential policies to encouraging the development of Integrated Circuit (IC) industry. SICA sources said that NDRC and MIIT have both confirmed that the competent government authorities are currently working on the formulation of such policies. www.sica.org.cn, 9/4/2009

USITO Notes: The State Council, Chinese Cabinet, formulated the No.18 Circular in 2000, an effort to encouraging the country¡¯s burgeoning software and IC sectors. The Circular ruled that imported materials and equipment for Chinese IC firms are exempt from taxes. The directive is effective from 2000 to 2010, as articulated in the text. Now with the deadline approaching, substituting policies began to emerge. In late 2008, three ministries led by the Ministry of Finance (MOF) issued the No.43 Circular ruling that from 1/1/2009 on, the government will begin levying the 17% VAT on imported semiconductor-manufacturing equipment and materials for by domestic IC manufacturing firms. The rule was later postponed for enforcement until 7/1/2009, thanks to outcries from domestic IC manufacturing companies. Levying 17% more tax on these imported stuff would inevitably increase the cost of the domestic firms, most of which saw sharp business decline from last year. The new policy, according to experts, is primarily aimed to encourage the manufacturing firms to buy homemade equipment, congruent with the spirit of the national ¡°Indigenous Innovation¡± drive.

Exemption rules are also available, however. The authorities have addressed the problem that China remains handicapped in top-tier semiconductor manufacturing equipment and short of key raw materials like silicon, despite the fact that the country manufactures a substantial portion (7.6% in 2008) of the world¡¯s IC ships. Late last month, MOF released its No.55 circular, stating that from 7/1/2009, ¡°Import custom taxes and import VAT will be exempted for the key components and raw materials that are used for manufacturing important hi-tech equipment and products supported by the government, and are really necessary for import¡±. USITO and its parent association Semiconductor Industry Association have been tracking this policy development and plan to issue a joint report soon. You are also welcome to contact wenjie@usito.org or ayen@sia-online.org to share your points and concerns.


Summer Davos Forum Opens in Dalian

The annual meeting of the World Economic Forum (WEF) New Champions 2009, or the Summer Davos Forum, was kicked off in Dalian City, a dynamic economic center in Northeast China. Starting Sept.10, the three-day event is said to attract about 1,500 top level government officials, business and media leaders, scholars and scientists from around the world. Chinese Premier Wen Jiabao gave a keynote speech in the opening ceremony, in which he explained China's stimulus plan and called for increased cooperation to meet collective challenges as the world recovers from the recent financial turmoil, he also said that China would take the adjustment of economic structure as a major task and attach greater importance to driving economic growth via domestic demand.

This year's Forum featured five major topics, one of which being "Opportunities in a green economy", in which participants would discuss the new opportunities arising from investments in a green economy. In Premier Wen's speech, he mentioned that China will accelerate the development of a low carbon economy and green economy so as to gain an advantageous position in the international industrial competition. For more information about the Forum, please visit its official website: http://www.weforum.org/en/index.htm.

USITO Notes: The Summer Davos meeting is widely reputed as a world platform to share different views to explore solutions to international issues. It is also a good opportunity for global industry leaders to get to know about China. USITO was invited to this event in 2007, with our former President Greg Shea joining the panel of "China IPR Protection" together with other leading industry experts like Aigo's CEO Feng Jun (retrospect). This year's theme was all about the reviving and healthy economic growth, macro issues of common interest would be discussed, such as China's strategy to address the increasingly unbalanced development between urban and rural areas and among various regions. It is also highly expected that China may share more details of its initial success to rejuvenating the economy during the event.


Sino-MR: China 3G Mobile Headset Sales Surge

According to the local leading telecom market research firm Sino-MR, in the first seven months, Chinese carriers sold over 600,000 mobile handsets compatible with 3G technology. Among this amount, about half were sold within two months: June and July.

The SINO-MR report stated that the top two 3G mobile phone vendors in Chinese market are Samsung and LG, while traditional dominant players, including Nokia and Motorola have dropped out of the top five list. Members click here for more detail

Member in the News: 50 mobile operators go IP with Nokia Siemens Networks

Nokia Siemens Networks' solution offers a smooth evolution path to LTE Mobile operators all over the world are bringing their networks into the Internet Protocol (IP) era with Nokia Siemens Networks, making the company a market leader in IP mobile backhaul networks. 50 mobile operators have found the move to IP both quick and cost efficient with just a simple software upgrade, without the need for new external hardware and with zero additional footprint at their base station sites. Detail

Selected Chinese Media Reports
 

Regulations

MOFCOM Promotes Service Outsourcing Industry

At the 13th China International Fair for Investment & Trade held on Sept. 9, the Ministry of Commerce (MOFCOM) signed a Memorandum of Understanding with 22 transnationals including P&G and Sony, encouraging these giants to move their service outsourcing business to China. The MOU was signed with a view to promoting the development of China¡¯s service outsourcing industry through combining China¡¯s advantages in human resources with giants¡¯ development strategy. Over 70 transnationals operating in China previously signed similar MOU with MOC. On the same day, the People¡¯s Bank of China, MOC and other four Ministries and Commissions jointly issued a circular, urging financial institutions to give robust support to the service outsourcing industry in credit, financing and foreign exchange transactions. This means service outsourcing enterprises can enjoy many preferential policies, including innovated credit, listing at home and abroad and streamlined examination procedures for foreign exchange receipts and payments. As of June this year, over 6600 enterprises deliver service outsourcing services to foreign clients. Chinese Text

Trade & Investment

Chinese Patent Application Grows Fast

According to latest statistics from the State Intellectual Property Office (SIPO), as of July 2009, China has accepted 5.341 million cases of patent application, of which 884,000 cases are submitted by foreign applicants; SIPO has granted 2.792 million patents, including 2.388 million domestic patents and 404,000 foreign patents. A report released by the World Intellectual Property Organization said the rapidly increasing patent application cases in China indicate China is improving in invention and innovation capabilities. Among the total patent applications lodged by domestic applicants, the percentage of invention patents is rising very fast. Initial statistics from the U.S. Patent and Trademark Office, the European Patent Office and Japan Patent Office show that in the first half of 2009, Chinese patent applications lodged with foreign patent authorities maintained steady growth, totaling 3524 cases, and the growth rate is more than that of invention patent applications accepted by the above three authorities. Chinese Text

Telefonica Buys More China Unicom Stakes

China Unicom and Telefonica announced jointly on Sept. 6 that a deal was signed on establishing a strategic alliance. Under the strategic alliance agreement, China Unicom and Telefonica will deepen their cooperation on joint procurement, mobile service platform development, foreign customer service, and international roaming and technology R&D. And at the same time, an equity subscription agreement was signed, under which, China Unicom and Telefonica shall hold stakes in each other, with the stakes equivalent to USD 1billion. Thus, Telefonica will acquire China Unicom stakes to about 8%, and China Unicom will buy 0.88% stakes in Telefonica. Telefonica Chairman Cesareo Alietra Izuel expected to avail himself of this cooperation opportunity to reveal the operations collaboration effect to benefit both sides¡¯ stakeholders and users, and improve the scale and diversification of operations of both sides. Chinese Text

RAMAXEL Goes Through U.S. Section 337 Investigation

Sources from Beijing-based East Associates Law Firm, which defends Shenzhen-based RAMAXEL as the attorney in Section 337 investigation case, said that ITC Administrative Law Judge Essex has signed an initial award, determining that RAMAXEL does not commit patent infringement. According to the attorney Ran Ruixue, as many as 18 companies were sued in this case, including chip makers, chip package companies, computer memory makers and computer makers. RAMAXEL got involved in the case just because it used such chips provided by others. Except RAMAXEL which won the lawsuit, most of other defending companies achieved a peaceful settlement of the lawsuit. Chinese Text

3G Mobile Communications

MIIT Vice Minister Calls for More Diversified 3G Products

At the 10th Wireless China 2009 held in Beijing on Sept. 2. Xi Guohua, Vice Minister of MIIT, stressed the need to increase investments in wireless industry, especially in the third generation (3G) mobile communication sector, to propel the development of 3G-related industries. 3G should play important roles in promoting economic growth and accelerating the development of industry chains, and addressing employment issues, so as to achieve stable and fast growth of the national economy, according to Xi. Xi Guohua also said that the development of 3G should be market demands driven, and increasingly diversified and personalized 3G products need to be provided. Chinese Text

China Unicom Sources WCDMA Handsets

An order-placing meeting was held by China Unicom in Harbin, Heilongjiang, for signing customized 3G handset deals. This is the first such meeting under China Unicom¡¯s circuit purchase plan. ZTE¡¯ s full series of WCDMA terminal products were exhibited at this meeting, and eventually ZTE signed a deal for supplying 40,000 units of its high-end smart handset X60. The circuit purchase meetings will be held in east China, south China and southwest region respectively. High-end smart products are the main concern of this meeting. ¡°ZTE has prepared full series of terminal products including low-end to high-end handsets, data cards and laptops for this meeting,¡± said the head of ZTE Heilongjian Branch, ¡°ZTE will join hands with China Unicom to bring domestic 3G users direct 3G experience.¡± Chinese Text

Semiconductor

Largest Semiconductor Industry Base Starts Operation

China¡¯s largest high-power semiconductor devices R&D and industrialization base started operation in Zhuzhou, Hunan on Sept. 9. This will smash up the monopoly of foreign manufacturers over high-end semiconductor device technology and market, and accelerate the industrialization of domestic high-power semiconductor devices. The industry base, with a total investment of RMB 350 million, was launched by Zhuzhou CSR Times Electric Co., Ltd. in late 2006. In the past, high-end semiconductor device technology and products used in China were largely imported from foreign countries, and exorbitant prices have hindered the development of this industry. Chinese Text

ZTE Unveils Super Capacity Cluster Router, Using Proprietary Chip

ZTE announced the availability of the global largest capacity cluster-type core router ZXR10 T8000, aiming at the high-end router market. What is noteworthy is that the core chips used in T8000 products are developed by ZTE independently, and have made breakthrough in three core chip technologies, including high speed route forwarding technology, large capacity packet switching technology and complicated traffic management technology. This is also the first time that a domestic vendor adopts independently developed chips in such high-end products. Fan Xiaobing, GM of ZTE¡¯s carrying network products unit, said, ¡°ZTE¡¯ s ZXR10 T8000 is the global largest-capacity cluster-type router system, with core chips developed on our own. It provides strong functions and excellent performance, and can help global customers build large capacity, high reliability, smart and green carrying networks." Chinese Text

Software

First AVS Industry Center Launched

On Sept.4, the AVS Industry Alliance signed a framework agreement with Guangzhou-based CHNAVS and the Management Committee of Qingyuan Economic Development Zone, Guangdong. Under the agreement, the AVS Industry Alliance will join hands with the municipal government of Qingyuan to build an AVSIndustryManufacturingPark in Qingyuan. With an investment of RMB3 billion, the project will take 6 years. The purpose of this AVS center is to hold together a number of foreign and domestic enterprises in digital audio-visual broadcast, multimedia communication and audio-visual consumer electronics, accelerate the manufacturing of AVS-compliant products, promote the development of the indigenous innovation-oriented hi-tech industries in Qingyuan, and make Qingyuan the first AVS Industry Manufacturing Center of China. The economic development zone is expected to achieve an output value of RMB22 billion by 2014. Chinese Text

China Oceanwide Acquires Lenovo Stakes

Lenovo Holdings announced on Sept. 8 that China Oceanwide Group bought 29% stakes of Lenovo at the price of RMB2.755 billion, thus becoming Lenovo¡¯ s third largest stakeholder, after CAS State-owned Assets Operation Co., Ltd. and the union of employee stakeholders. Lenovo also released a plan to take up direct investment business and to invest about RMB10 billion to develop core assets, with focus on 5 fields including clean energy and environment protection, new materials, hi-tech, financial services, and industries related to domestic demands. According to an agreement signed between Lenovo and China Oceanwide, China Oceanwide shall not assign its shares in the next 5 years. Lu Zhiqiang, China Oceanwide Group Chairman and President, explained that China Oceanwide¡¯s decision to hold stakes in China Unicom is largely due to high recognition of Lenovo¡¯s management philosophy and corporate culture, and a strategic adjustment. Chinese Text

Boke Software Gains Dominance

Domestic software brands are leading in the informatization process of supply chains in China. Due to sharp increase of its logistics supply chain management software, Boke has pushed past international management software giants, including SAP, and gained its dominance in Chinese market. Statistics show that Boke has 34% of China¡¯s market, securely ranking number one in market shares. Reliable products and excellent application & industrial solutions are reasons why large numbers of users choose Boke. Chinese Text

  

USITO selected and translated the news summaries above. If you are interested in learning more details about the above Chinese language links, you are welcome to contact us (wenjie@usito.org) to sponsor the translation of that report.

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