China Technology News

2012-02-02T09:38:00.000-08:00

Top Stories...

Facebook hopes to re-friend China despite censors

2012-02-02T09:36:00.001-08:00

Source: By Allison Jackson (AFP)

BEIJING — As Facebook prepares to go public it has its sights on China, where the social media titan is blocked, but analysts say its chances of re-entering the market of half a billion Internet users are slim.

Facebook, which filed paperwork Wednesday seeking to raise $5 billion on Wall Street, said it continued to "evaluate entering China" -- the world's largest Internet market and a huge dark spot on Facebook's global map.

"There are more than two billion global Internet users and we aim to connect all of them," the California-based company said in the listing documents filed with the US Securities and Exchange Commission.

Facebook, which has more than 800 million users around the world, is the leading social network in all but six countries, notably Russia, where local rivals are preferred, and China, where it has been banned for years.

Beijing blocked Facebook along with micro-blogging site Twitter after blaming it for fanning social unrest in the northwestern region of Xinjiang in 2009, though many web users access the site via virtual proxy networks.

Prior to the ban, web users in China enjoyed uncensored access to Facebook.

In the run up to a major leadership transition later this year, experts said Facebook has next to no chance of being allowed to operate freely in China, unless it is willing to bow to the country's army of censors.

"Under the current political structure (it has) probably zero to nil" chance of operating in China again, said Bill Bishop, a Beijing-based Internet consultant and investor.

Anne-Marie Brady, an expert in Chinese politics at New Zealand's University of Canterbury, agreed, saying the only way Facebook could re-enter China was if it followed "the same censorship requirements as Chinese-based websites".

Despite the hurdles, Facebook Chief Executive Mark Zuckerberg is clearly keen to see his company crack the Chinese market, which has more than 500 million users, nearly half of whom use weibos, which are similar to Twitter.

Zuckerberg said previously that he was "spending a lot of time" studying Chinese and visited the country in December 2010 with his girlfriend Priscilla Chan, when he met with the head of the country's biggest search engine Baidu.

Analysts believe Zuckerberg and Baidu Chief Executive Robin Li were discussing a possible tie-up that could enable Facebook to enter China, but were forced to abandon the talks after the Arab Spring protests in early 2011.

Facebook was used heavily by protesters during the upheaval across North Africa and the Middle East, underscoring Communist leaders' fears that these sites posed as a "real threat to stability and the government", Bishop said.

"Ultimately it was realised by both parties that the Chinese government was not going to approve Facebook in China," he said.

"The government is very cognitive of the power of these networks and the potential threats to the government."

But caving in to Chinese censors did not make business sense either, Bishop said. Facebook would have no "competitive advantage" over home-grown social networking sites such as Sina's Weibo, Tencent's QQ and Renren.

Beijing attempts to block content it deems politically sensitive through a censorship system known as the "Great Firewall of China".

The next 12 months are particularly sensitive for Chinese leaders as they prepare for a once-in-a-decade transition of power that begins later this year, and Beijing is stepping up efforts to keep a lid on social unrest.

Internet and technology firms have been pressured to stop the "spread of harmful information", while Beijing, Shanghai and the southern province of Guangdong have ordered weibo users to register under their real names, making it easier for authorities to track them down.

But the explosion of social networking sites poses a huge challenge to official attempts at controlling information in the country of 1.3 billion, as users can re-post news and images as fast as censors take them down.

The number of weibo users more than trebled in 2011, jumping to 250 million from just 63 million at the end of 2010, official data shows, as more and more people went online to vent their anger at official corruption and scandals.

A weibo user is believed to have broken the news of a deadly high-speed train crash in July that provoked widespread condemnation of the government, while news of a rare revolt against Communist officials in the country's south in December first emerged on weibos.

Amid the growing influence and popularity of social networks, Facebook will struggle to convince authorities obsessed with maintaining stability to unblock its website, said Duncan Clark, chairman of Beijing Internet consultancy BDA.

"In terms of 2012 I would think it unlikely that the government would send a signal of liberalisation during a season of conservatism and control ahead of the leadership transition," he said.

"There isn't much upside in any bureaucrat advocating this."

Google's mapping service hits a bump in the road

2012-02-02T09:34:00.000-08:00

Source: By Chen Limin (China Daily)

BEIJING - The search engine Google Inc is unable to provide "new" online mapping services in China. That's because the company has yet to receive a license to conduct the business from China's industry regulator, citing a deadline of Feb 1.

The news is a negative signal for the company's operations in the country, where its market share is declining, said analysts.

The State Bureau of Surveying and Mapping is examining a license application it received last year from the Chinese division of Google, the bureau said in an e-mailed statement to China Daily on Wednesday.

However, it didn't elaborate what "new" online mapping services refers to in its statement.

It's not known when a result for the company's application will be announced, although other major online mapping services providers have been granted licenses. By Jan 31, the bureau had granted licenses to 279 online providers, it said.

Since last year, Google has seen its share of the online mapping market shrink, partly because of the uncertainty over whether it will be awarded a license.

In the third quarter of last year, about 61 percent of the daily traffic to online mapping websites went to Baidu Inc, China's biggest search engine by market share, followed by almost 10 percent for Mapbar.com, and Google had 9 percent, according to the domestic research company Analysys International.

Moreover, an increasing number of websites that use the data provided by online mapping services providers have turned to Google's rivals, according to analyst Yan Xiaojia of Analysys International.

There are 48,000 websites of this type in China, and about 60 percent of them used Google's mapping data in the first half of last year. However, the company is now losing its dominant position, said Yan.

Hong Bo, an IT critic who follows Google, said the bureau's statement may deliver a blow to the company. Internet users will also be affected if Google's current online mapping business is further influenced in the future.

In a statement to China Daily, Google China said that it had "nothing new to add" to an earlier statement that it was "in discussions with the government about how we can offer a mapping product in China".

The company's online mapping service, Ditu.google.cn, is still available. In the statement, the bureau said Google will still be able to operate its current business.

Google moved its searching business to Hong Kong in 2010, and since then it has seen its share of the online search market eaten up by rivals.

However, Hong Bo said that the online mapping service is only part of Google's business in China, and the company's Android mobile operating system is reaching an increasingly large number of users and is the most popular operating system among the nation's smartphone users.

In January, Daniel Alegre, president of the company's Asia-Pacific operations, told Bloomberg News: "We have some of the best employees at Google and we continue to grow not only our revenue but also our headcount in the country."

Alegre said Google's business in China is growing and "continues to thrive" because of the rising demand for advertising services.

Companies need to have a license to provide mapping services in China as the service may involve information related to national security.

Companies that didn't apply for a license to provide the mapping services would not be allowed to continue doing so after Feb 1, the State Bureau of Surveying and Mapping said in a statement on its website on Jan 5.

Angry Birds opens online store

2012-02-02T09:31:00.000-08:00

Source: By Chen Limin (chinadaily.com.cn)

Rovio Entertainment Ltd, the maker of the popular game Angry Birds, on Thursday officially opened its virtual store on Tmall.com, China's biggest e-commerce website where companies sell to customers.

The hit game developer is attempting to further cash in on the Chinese market by selling authentic Angry Birds products as most of the Angry Birds spinoffs currently available in China are counterfeits.

Its online store provides spinoffs ranging from T-shirts to food, including Angry Birds cookies targeted at the coming Valentine's Day.

Last October, the Finnish company opened its operation in Shanghai, its first overseas branch outside Finland.

2012-02-01T09:46:00.000-08:00

Top Stories...

Foxconn steps up recruitment in Zhengzhou

2012-02-01T09:44:00.000-08:00

Source: Want China Times

Despite serial reports of harsh working conditions at its factories, Taiwan-based contract electronics manufacturer Foxconn plans to hire 100,000 people in Zhengzhou, the capital of the central Chinese province of Henan, which attracted thousands of hopefuls to line up for a job on Monday, reports our sister Chinese-language newspaper China Times.

A previous story by the Chinese-language Apple news website Mic Gadget said that Foxconn has entered a partnership with the Zhengzhou government, aiming at doubling the size of its local workforce by hiring more than 100,000 workers.

Apple's main contractor held a recruitment drive at a human resource center in the city on Monday. The more than 1,000 jobseekers were mostly young people, creating a queue of longer than 200 meters outside the center from the night before the event. A report from the Chinese-language news website ITXinWen likened their fervor to would-be buyers of the iPhone 4S.

Labor shortage problems in China have spread from coastal provinces to interior regions. Foxconn's facilities in the central city of Wuhan, which has 32,000 employees and plans to add 7,000 workers this year, has responded by setting up a reception in the city's train station from Jan. 28, offering a bus to take jobseekers to the factory directly.

On Tuesday, Foxconn's recruitment in southern city of Shenzhen in Guangdong province also attracted thousands of hopefuls and hired nearly 5,000 people in a day.

"The company guarantees payment," a jobseeker surnamed Liu was quoted by the local Southern Metropolitan Daily as saying.

Foxconn has come under fire in recent years for unsafe working conditions and military-style management that has driven employees to despair and suicide. The company has raised basic pay levels several times to improve its negative image.

Liu Kun, a spokesman for Foxconn, told the newspaper that the Shenzhen factory has raised its starting salary from 1,550 yuan (US$246) per month to 1,750 yuan (US$277), with insurance, food and board included. The base in Zhengzhou has set its starting salary as 1,650 yuan (US$262) per month, which may increase to anywhere from 2,400 to 3,200 yuan (US$380 to US$$507) per month.

HTC plays the long game in growing patent battles

2012-02-01T09:41:00.000-08:00

Source: Want China Times

Taiwanese smartphone maker HTC has achieved the impressive success of becoming Asia's second-biggest smartphone maker and the No. 4 supplier in the global market following accelerated expansion in the past four years. But the Taipei-based enterprise's entanglement in lawsuits and countercharges involving Apple underscore the increasingly vital role of patent rights.

As one of the earliest smartphone producers to adopt Google's Android operating system, HTC has outshone international giants Nokia and Research In Motion. The strategy and rocketing sales of HTC smartphone made 2011 a glittering year for HTC chairwoman Cher Wang, catapulting her and her husband into the position of the richest couple in Taiwan. The couple also possesses major stakes in Via Technologies, an affiliate of HTC, and jointly own net assets amounting to US$6.8 billion as of March 2011 to dethrone Terry Gou, founder of the Hon Hai and Foxconn groups in wealth ranking, according to statistics released by Forbes magazine.

The market capital of HTC, which has traded on the Taiwan stock exchange for nine years, increased to US$33.79 billion to eclipse Nokia's market worth of US$32.84 billion for the first time after its stock price surged 5.3% to hit NT$1,200 (US$40.48) per share on April 6 of the same year.

But HTC's success has also drawn multiple patent infringement litigation, according to a report from the Southern Weekly based in Guangzhou. In a move to defend the market share of its iPhone, Apple filed a lawsuit against HTC in the state of Delaware plus a complaint to the International Trade Commission (ITC) in Washington.

To boost its patent portfolio, HTC through VIA Technologies acquired S3 Graphics, which had won an initial determination at the ITC against Apple, and filed countercharges against the US company. But an ITC judge found in an initial ruling in July that HTC infringed on two Apple patents while the US company filed a second ITC complaint against HTC in the same month.

The lawsuits from Apple and a complaint from IPCom affected sales of HTC smartphones in Germany and sent the company's share prices lower on the stock market.

Wang, however, the daughter of industrialist and Formosa Plastics Group founder Wang Yung-ching, had no plans to throw in the towel. HTC filed a lawsuit in Delaware and with the ITC against Apple in mid-August. The company soon amended the suit and complaint by using nine new patents acquired from Google in early September.

It is difficult to predict how a possible new court verdict and ITC ruling might turn out, but most analysts do not think Wang will give up without a putting up a good fight. Wang went to the US to study by herself at the age of 15 and earned her master's degree in economics from the University of California, Berkeley in 1981. She and her husband Wenchi Chen made their own fortune by establishing First International Computer and then VIA Technologies in 1987 and then HTC in 1997. It took many years and countless court hearings before VIA Technologies struck a settlement and patent-exchange deal with Intel.

Apple co-founder Steve Jobs had reportedly instructed his colleagues to step up the legal fight against Google to defend the market share of Apple products before he passed away last year. But with support from Google, Wang, 54, and her HTC team will now have new ammunition to fend off lawsuits. Analysts say HTC has played a major role to help lift the market share of Google's Android operating system to 52.5% for smartphones.

Google should take more action because helping HTC is like helping itself since the American company may eventually face Apple or other software giants in head-on legal clashes over patent rights, said analysts.

The intensified patent claims, lawsuits and demands for high royalty payments in the competitive hi-tech sector will serve as constant reminders for Wang and her staff to spend more time and investment in R&D projects for long-term development, said the analysts.

Shanghai court to hear iPad name suit

2012-02-01T09:39:00.000-08:00

Source: Shanghai Daily via china.org.cn

A Shanghai court is to hear a case where Apple is accused of infringement by a Shenzhen-based company for using the iPad trademark on the Chinese mainland.

On February 22, the Pudong New Area People's Court will hear a suit filed by Proview Technology (Shenzhen), which follows a verdict in November when a court in Shenzhen in Guangdong Province rejected Apple's demand for control of the iPad trademark on the mainland from Proview.

After losing the casein Shenzhen, Apple appealed to the Guangdong Province Higher People's Court demanding the control of the trademark and compensation of 4 million yuan (US$634,095).

Proview says it registered the trademark in 2001 and has held it since then. Apple argues it gained the trademark in 2006 from UK-based IP Application Development (IPAD).

In 2006, Proview Electronics (Taiwan), which heavily invested in setting up Proview Technology (Shenzhen), agreed to sell the "global iPad trademark" to IPAD for 35,000 pounds (US$55,104), and the UK company transferred the trademark to Apple.

The "global iPad trademark" included trademarks Proview Electronics (Taiwan) registered in a number of countries and regions between 2000 and 2004. Proview Technology (Shenzhen), however, said the trademark for the Chinese mainland was not included in the 2006 deal because the Shenzhen company held it and not the Taiwan one.

The Shenzhen court ruled there was no proof Apple had got the trademark from Proview Technology (Shenzhen).

2012-01-31T10:08:00.000-08:00

Top Stories...

China-Based Hackers Target Law Firms as Back Doors in Search for Deal Data

2012-01-31T10:05:00.000-08:00

Source: Bloomberg By Michael A. Riley and Sophia Pearson

China-based hackers looking to derail the $40 billion acquisition of the world’s largest potash producer by an Australian mining giant zeroed in on offices on Toronto’s Bay Street, home of the Canadian law firms handling the deal.

Over a few months beginning in September 2010, the hackers rifled one secure computer network after the next, eventually hitting seven different law firms as well as Canada’s Finance Ministry and the Treasury Board, according to Daniel Tobok, president of Toronto-based Digital Wyzdom. His cyber security company was hired by the law firms to assist in the probe.

The investigation linked the intrusions to a Chinese effort to scuttle the takeover of Potash Corp. of Saskatchewan Inc. by BHP Billiton Ltd. as part of the global competition for natural resources, Tobok said. Such stolen data can be worth tens of millions of dollars and give the party who possesses it an unfair advantage in deal negotiations, he said.

Though the deal eventually fell apart for unrelated reasons, the incident illustrates the vulnerability of law firms. They are increasingly threatened with a loss of client business if they can’t show improved security as such attacks continue to escalate.

Stephen Surdu, vice president of professional services at Mandiant Corp., a cybersecurity firm that tracks industrial espionage, compared the risk of hacking in the mergers and acquisition arena to gambling.

“You’re playing poker, and there’s a mirror over the other guy’s shoulder,” Surdu said.

Easier Quarry

“As financial institutions in New York City and the world become stronger, a hacker can hit a law firm and it’s a much, much easier quarry,” said Mary Galligan, head of the cyber division in the New York City office of the U.S. Federal Bureau of Investigation.

Galligan’s unit convened a meeting with the top 200 law firms in New York City last November to deal with the rising number of law firm intrusions. Over snacks in a large meeting room, the FBI issued a warning to the lawyers: Hackers see attorneys as a back door to the valuable data of their corporate clients.

“We told them they need a diagram of their network; they need to know how computer logs are kept,” Galligan said of the meeting. “Some were really well prepared; others didn’t know what we were talking about.”

The ability to keep client information confidential is a key principle of how law firms function. The attacks have created what Tony Cordeiro, chief information officer at White & Case LLP, termed a “healthy paranoia.”

80 Firms Hacked

Mandiant, which is based in Alexandria, Virginia, said it estimates that 80 major U.S. law firms were hacked last year.

More than a dozen law firms contacted about the New York City meeting, including Wilson Sonsini Goodrich & Rosati PC and Cadwalader Wickersham & Taft LLP, didn’t return telephone calls and e-mails seeking comment. Jennifer Becker, a spokeswoman for Skadden Arps Slate Meagher & Flom LLP and Kevin Blasko, a spokesman for Baker & McKenzie LLP, declined to comment.

Mark Hendrick, director of information technology for Baker Botts LLP, declined to comment beyond confirming the firm’s attendance at the November forum.

“Given the sensitive nature of the topics discussed, including possible threats to the safety of our IT network, I can only state that at Baker Botts we work diligently every day at maintaining the integrity of our systems,” Hendrick said in an e-mailed statement.

‘Up at Night’

Cordeiro said “protecting ourselves against threats keeps me up at night.”

To enhance New York-based White & Case’s data security, he said he requires the use of encrypted connections and restricts the use by attorneys of vulnerable file-hosting programs like Drop Box, a cloud-based system that allows users to save files including photos, documents and videos. White & Case is one of a handful of firms to receive an accreditation for information protection, which some law firms are now using as a selling point to clients.

Edward Stroz, a partner in the data security firm Stroz Friedberg LLC, said many more law firms have knocked on his door within the last 12 months than previously. They are driven there in many cases by clients, who are demanding greater protection of their confidential information, he said.

Dedicated Terminal

In some sensitive cases, Stroz has required lawyers to access highly sensitive client data directly in a secure location, banning e-mail or the digital transfer of documents.

“They have to go on site at the client company, use a dedicated terminal and review the data there so that the client knows it never left the building,” Stroz said.

The level of skill and seriousness of the attacks differs widely. Attackers include hackers looking for information they can sell quickly. Law firms representing celebrities, for example, are top targets, said Don Jackson, a researcher with Atlanta-based Dell SecureWorks, a cybersecurity firm.

The Canada case involving Potash Corp. of Saskatchewan Inc. by BHP Billiton Ltd. (BHP) shows just how serious the threat can be. The intruders were professionals potentially linked to the interests of a nation-state, with all its resources, said Anup Ghosh, chief scientist at the Fairfax, Virginia-based cyber security firm Invincea Inc.

New Spy Game

“This is the new way the spy game is played,” Ghosh said.

Chinese government officials have denied any involvement. Calls to the Chinese embassy in Ottawa weren’t immediately returned. Bill Johnson, a spokesman for Potash Corp., and Ruban Yogarajah, a spokesman for BHP, declined to comment.

At the time of the attacks, China was on the hunt for new sources of agrochemicals. Potash is a common name for compounds containing potassium used in the manufacture of fertilizer.

Sinochem Group, China’s formerly state-owned chemical giant, hired Deutsche Bank AG and Citigroup Inc. in September 2010 to evaluate moves to disrupt BHP’s bid for Potash Corp., a hostile tactic approved directly by the Chinese government, according to a report at the time by the Financial Times.

Tobok said a law firm involved in the deal detected signs of the intrusion the same month, including network disruptions. Analyzing the attack, investigators found that the spyware designed to capture confidential documents -- and sent via spoofed e-mails -- was compiled on a Chinese-language keyboard and China-based servers were involved in the attack, he said.

Aboriginal Ruse

Technical similarities connected those attacks with counterfeit e-mails sent to Finance Ministry officials supposedly from an aboriginal group opposed to the deal, according to Tobok. The e-mails directed the officials to a website which stealthily downloaded spyware through a vulnerability in web browsers onto state-owned computers, according to a Canadian government report cited by the Ottawa Citizen in October.

“It sounds like something out of Mission Impossible, but this is the sophistication of the stuff out there,” Tobok said.

It’s not known how successful the attacks were or how any data stolen was used by the intruders, investigators have said. The government report said the attack on the federal ministries was successful in stealing some data.

According to a person familiar with the case who asked not to be identified because of the criminal investigation, the hackers’ victims included Toronto-based law firms Blake, Cassels & Graydon LLP, which represented BHP, a company with primary offices in Melbourne, Australia, Singapore and London.

Also hit, the person said, was Stikeman Elliott LLP, which represented Saskatoon, Canada-based Potash Corp.

Detailed Knowledge

The law firms would have had detailed knowledge of the deal’s negotiations, including potential weak points, the person said. Diana Lawrence, a spokeswoman for Stikeman Elliott, said there was no evidence client information was compromised or that the firm’s networks were breached. Robert Granatstein, managing partner of Blake Cassels, said that the firm wasn't aware that any client data was compromised.

The Canadian government later killed the BHP takeover using federal powers to declare it wasn’t in the nation’s interest.

Similarities between the Canadian attack and other recent intrusions at U.S. law firms suggest that cyberattacks on attorneys are now part of the hacking playbook for gathering sensitive information on corporate clients, according to Ghosh.

In one recent case, a corporation was negotiating to open a major plant in China when the law firm helping with the deal was hacked, Surdu said.

“They were looking for what the company was willing to pay for that land, what were they willing to pay to bring roads to the facility,” he said. “This was a major deal with lots of zeros on the end.”

Law Firm Hacks

Other recent law firm hacks involved efforts to steal secret details about a merger and documents relating to an opponent’s strategy in a major litigation, Ghosh and Surdu said.

Galligan, the FBI agent, said that the culture of law firms and the significant sway of partners often make them a soft target.

“Everybody wants network administrator rights,” Galligan said. “It’s trendy.” She said partners insist on mobility -- including the flexibility to review case documents at weekend homes or on the road -- which means highly sensitive documents are routinely transferred by e-mail.

At the November meeting, the FBI urged firms to review their mobility policies, including the security of e-mail linkups and mobile phones, Galligan said.

“If clients start thinking they can’t give private information to their lawyers because it might get out, it’s a huge problem for the profession,” said Richard Goldberg, a former software programmer and lawyer in Washington involved in the data security issue. “The whole system will start to fail.”

Apple set to expand presence in China

2012-01-31T10:00:00.000-08:00

Source: By Zhang Yuwei (China Daily)

NEW YORK - Apple Inc recently released its fiscal 2012 first quarter results. The company posted record quarterly revenue of $46.33 billion, with iPhone sales totaling 37 million units.

At the earnings call, Apple CEO Tim Cook said China is an "extremely important market" for the company, and it will continue to look at how to grow its presence in the country.

But China is not simply seen as a potential growth market for Apple products. The country often is regarded as the company's main production base.

US consumers could be misled when they turn over an iPhone and see the "Made in China" label. They often think that means China is taking US jobs and making money from US products.

The reality is that this impression is not an accurate reflection of the situation.

A report written by three US professors - who attempted to capture value in global networks by using Apple's iPad and iPhone as research examples - shows that only about "$10 or less in direct labor wages that go into an iPhone or iPad is paid to Chinese workers".

The report points out that while the Apple products - including components - are manufactured in China, the primary benefits go to the US economy. That's because Apple continues to keep most of its product design, software development, product management, marketing and other high-wage functions in the US. China's role, the report concludes, is much smaller than the casual observer would think.

The supply chain for the iPhone 4 actually presents a good example of how it works: The device was designed by Apple engineers in the US, sourced with components from different parts of the world and is only assembled in China factories owned by the Taiwan-based company Hon Hai Precision Industry Co Ltd, also known as Foxconn Technology Group.

One of the report's authors, Jason Dedrick, a professor at Syracuse University, said that China makes very little money from these products.

Rather, much of the value in high-end products such as Apple's, is captured by the brand, distributors and retailers - the beginning and the end of the process.

The report said that each unit sold in the US - at a price of around $600 - adds between $229 and $275 to the US-China trade deficit (the estimated factory costs of an iPhone or iPad). However, the portion retained by the Chinese economy is "a tiny fraction of that amount".

Another of the report's authors, Kenneth L. Kraemer, a professor from the University of California, said that most consumers simply don't quite understand how global supply chains work in this case.

"They (people who think China's role is bigger in the production of Apple products) focus only on the trade deficit with China, and therefore they think China has a bigger role. What they don't understand is that China gets all sorts of input from other countries from Japan, the US, Malaysia and so on. So China's contribution is really a small amount of labor," Kraemer said.

"They think China's role is bigger simply because they don't understand how global supply chains work. They think everything from an iPad and iPhone is made in China rather than just shipped (components) and assembled there," Kraemer said.

Inspur International To Sell Chinese E-government Business

2012-01-31T09:57:00.000-08:00

Source: China Tech News

Hong Kong-listed information technology and outsource software development company Inspur International has published a report, stating that it will sell its e-government business, Shandong Inspur E-Government Software Limited, to Shandong Inspur Software Company Limited for CNY23 million.

Inspur International is expected to gain about CNY259,000 from the disposal, and the capital gained will be used for general operations and the development of other potential businesses.

At the same time, Inspur International said the e-government business only contributed a small part of the overall revenue of its information technology services. Therefore, the transaction will barely impact the overall operating revenue of the company. In addition, the company can gradually reduce the trading value of related transactions and increase the business independence of the company.

Inspur International's e-government business is mainly engaged in the manufacturing, sales and development of e-government software in China. As the purchaser, Shandong Inspur Software Company Limited is an associate of a controlling shareholder of Inspur.

2012-01-30T09:17:00.000-08:00

Top Stories...

Online rail ticket site 'hacked'

2012-01-30T09:15:00.000-08:00

Source: By He Wei (China Daily)

SHANGHAI - The difficulty of securing a train ticket online during the Spring Festival has prompted hackers to write computer programs that break into booking sites.

The official e-ticket channel 12306.cn opened for sales over the holiday period on Jan 8 and has received 100 million hits a day. The bombardment has led to thousands of requests being rejected every second.

Now would-be customers are resorting to a hacking tool known as "tag-on" software that disrupts a website's normal operations and allows unauthorized access. For buying train tickets it enables a computer to automatically and repeatedly try to access the site and was born out of the frustration with rejection that many have suffered.

Zhang Yu, 26, stayed up two nights in a row attempting to buy a ticket without success.

"I downloaded three different types of software," he said. "My friend used one of them to get a ticket. However, they all demand personal information and a link to an online banking site. I was worried about privacy so I stopped using them."

Nonetheless, key words such as "train ticket tag-on software" have become the latest hot searches on baidu.com, the country's most popular search engine. The past week has seen the churning out of dozens of such programs.

"This software saves the time and effort of constantly clicking the mouse out of desperation," Yao Wenhao, developer of one such program, told China Daily.

Xiao Yao, 24, worked in Shanghai as a software developer at a gaming company. His desire to visit his parents in Hunan during the holiday prompted him to put his knowledge to use.

Yao's tag-on is called "Go-Home". It is available for free download via major technology forums. Three days after Yao first posted it on Google Code, a sharing site for developer tools and technical resources, the 5-megabyte software had been downloaded more than 80,000 times.

Yao said the program successfully secured him a high-speed train seat after just a three-minute trial.

"The idea of writing a ticket-buying program came to me two months ago," Yao said. "My intention was to help myself but once I bought my ticket, I thought why not help others?"

Yao, who is a self-described geek, wrote a two-page instruction document which he attached to the software.

He said the biggest technical hurdle was to identify random numbers the website generated to strengthen security and automatically link the inquiry page to online payment. It took him 10 days to solve the challenge.

More than 100 variants of such programs have emerged on Taobao.com, a popular e-commerce site, priced from 1 to 5 yuan (79 cents) for each download.

While the likes of Yao claim their intentions were benign, others have been accused of being outright scams.

Wang Zhantao, an Internet security expert with anti-virus software provider Rising, said some malicious programs, in the guise of the tag-on software, unleashed malicious code on to victims' machines that gave hackers access to bank accounts and passwords.

Tag-ons have also been accused of compromising the ticketing system.

"The rocketing traffic generated by such software has in turn loaded an artificial burden on to the already vulnerable website, running the risk of completely jeopardizing the server," said Wang.

'The software fails to create a level playing field for all buyers. It only causes vicious circles."

Acer, Asustek enjoy highest growth in Asia-Pacific PC market

2012-01-30T09:12:00.000-08:00

Source: Want China Times

Taiwan-based PC makers Acer and Asustek recorded higher year-on-year PC shipment growth among the world's top five vendors in 2011 in the Asia-Pacific market excluding Japan, according to market intelligence and advisory firm International Data Corp (IDC).

PC shipments in the region grew 11% from 2010 to reach 119 million units in 2011, highlighting resilience in the Asian market despite the weak global economy that persisted throughout the year, IDC said in a report released Thursday.

Lenovo Group continued to lead the market with a 22.5% share, not just holding strong in its home market of China but also posting robust growth in the rest of the region. It was followed by Acer (11.6%), Dell(10.4%, Hewlett-Packard (9.9%) and Asustek (6.4%), the report said.

Acer, which had a management reshuffle in 2011, enjoyed the highest year-on-year unit growth of 38% among its peers last year, while Asustek boosted its shipments by 34% compared with 2010, the report said.

"The PC market took a number of punches last year, be it from the uncertain global economy or from tablets, which competed for consumer attention," said Bryan Ma, associate vice president of Asia-Pacific client devices research at IDC.

"PCs will still face disk-drive supply challenges in the early part of 2012, but IDC also expects the market to rebound quickly by the second half of the year to remain close to 10% growth for the year in the Asia-Pacific region," Ma said.

Both Acer and Asustek reported lower share prices last year in the worldwide PC market, where Acer accounted for 11.2% and Asustek took 5.9%, seizing fourth and fifth places, respectively, said research firm Gartner.

Worldwide PC shipments increased only 0.5% from 2010 to 352.8 million units in 2011, Gartner said, with weakening consumer demand in mature markets named as a major contributor to the stagnation.

CNNIC: China's Microblog Users Reached 250 Million In 2011

2012-01-30T09:10:00.000-08:00

Source: China Tech News

China Internet Network Information Center has published a new statistics report, stating that there were 250 million microblog users in China by the end of 2011, a year-on-year increase of 296%.

Meanwhile, the use of traditional Internet communication applications like email and forums saw significant declines. Microblogging has become one of the most important Internet applications in China in just one year, and it is claimed to used by nearly half of Chinese netizens.

According to the report, by the end of December 2011, the number of Chinese microblog users increased by 296% year-on-year to 250 million, and the usage rate by netizens reached 48.7%. At the same time, the usage of email decreased from 54.6% in 2010 to 47.9%; the usage of Internet forum decreased from 32.4% to 28.2%; and the usage of blog and personal space decreased from 64.4% to 62.1%.

The report also pointed out that the social networking sites in China are exploring various areas to increase user loyalty. The country's major social networking sites all made expansions or adjustments to their long-term strategies in 2011.

In regards to the development of microblogs in China, CNNIC analyzed that the current development of microblogs is diversified, and it focuses on the social networking functions and social media functions. Second, the profit models of microblogs is yet to be discovered; however, various attempts have been made to realize profits. Finally, supervision measures will have important influences on the development of microblogs in 2012.

2012-01-27T09:38:00.000-08:00

Top Stories...

Twitter Can Censor by Country

2012-01-27T09:37:00.000-08:00

Source: Wall Street Journal By Loretta Chao and Amir Efrati

BEIJING—Twitter Inc. says it can now make content selectively available to users based on geography, and plans to use that ability to enter countries with "different ideas" about freedom of expression as a human right—reflecting the difficult ethical questions facing Internet companies.

The announcement, published on the official blog of the microblog operator, said Twitter is now able to withhold content from users in a specific country while keeping it available to the rest of the world.

The effort underscores thorny issues for Internet companies as their websites become more global and interconnected among different countries, and as they must cooperate with diverse views on Internet content control. For websites like Twitter as well as social-networking site Facebook, this has meant being blocked in countries like China where controls are more aggressive.

"As we continue to grow internationally, we will enter countries that have different ideas about the contours of freedom of expression," the post said, adding that in Germany, pro-Nazi content is banned. It said the ability has not been put to use yet, however.

Twitter said in the post that it would take measures to notify users if it withholds posts. "If and when we are required to withhold a Tweet," or microblog post, "in a specific country, we will attempt to let the user know, and we will clearly mark when the content has been withheld, and why," it said.

Twitter will work with Chilling Effects, an Internet freedom advocacy website that compiles content take-down notices, to publish take-down notices. Such a practice would make it difficult for Twitter to operate in China, where Internet executives say prohibited keywords are treated like state secrets.

The company did not list countries in which it plans to use its new ability, but said that it would not be a solution for all. Some countries "differ so much from our ideas that we will not be able to exist there," the post said, an implicit reference to countries such as China that have banned Twitter.

China has more Internet users than any other nation. Local Web firms in China employ dozens or hundreds of staff to police user-generated content daily, and are required by law to take down a frequently updated list of banned keywords for varying lengths of time, including those related to calls for peaceful political action.

Internet giant Google Inc., which had operated in China for four years while cooperating with censorship requirements, made the controversial decision two years ago to cease censorship in the country and to move its Chinese-language Web search service to Hong Kong. The decision was the subject of much disagreement both in and outside the company, and even among Internet freedom advocates, with some believing censorship in any form was unethical, and others believing that being present, even if censored, in China would ultimately help make information flow more freely within the country.

Twitter has been blocked for more than two years in China by Web filtering technology. Some loyal users use circumvention tools to access the website, but most microblogging users in China now use Chinese services, including by Sina Corp. and Tencent Holdings Ltd. Some loyal users use circumvention tools to access the website, but most microblogging users in China now use Chinese services, including by Sina Corp. and Tencent Holdings Ltd.

These websites have grown quickly and collectively have hundreds of millions of user accounts, despite censoring content, and new regulations that require users to register for their services using real-names.These websites have grown quickly and collectively have hundreds of millions of user accounts, despite censoring content, and new regulations that require users to register for their services using real-names.

Though the new system likely wouldn't allow Twitter back into China, initial reaction was negative among those who use it there through proxy services. "If Twitter starts censoring, then I'll stop tweeting," tweeted Ai Weiwei, the outspoken Chinese dissident artist and frequent tweeter.

Twitter has been instrumental in helping people to organize revolutionary or political protests in countries such as Egypt, Tunisia, the U.K. and U.S.

Twitter, which has said it has more than 100 million active accounts around the world, is making a push to become an online-advertising giant like Google.

The San Francisco-based Twitter, created in 2006, currently has a handful of employees in the U.K. and Japan in addition to its more than 700 U.S. employees.

As it expands elsewhere, the company will have to comply with local law or its employees could potentially face prosecution or other legal action.

Twitter's general counsel, Alex Macgillivray, is a former Google lawyer who had a hand in crafting some of that company's censorship-related policies. He also has worked on ChillingEffects.org.

Twitter CEO Dick Costolo has stated that the company is "the free speech wing of the free speech party."

More than a year ago, Twitter publicly disclosed that the U.S. government had obtained a court order requiring it to hand over information about four accounts of Twitter users in connection with an investigation of WikiLeaks, the website that published secret and classified information.

Twitter disclosed the request so that the account holders could "fight the request," Mr. Costolo said last year.

Twitter said in its post, "One of our core values as a company is to defend and respect each user's voice. We try to keep content up wherever and whenever we can, and we will be transparent when we can't."

Apple 'attacking problems' at its factories in China

2012-01-27T09:35:00.000-08:00

Source: The Telegraph By Malcolm Moore

Apple has defended its ethical standards after a newspaper reported factories in China rely on child labour, 24 hour days and unsafe conditions to manufacture iPhones, iPads and computers.

In an email reportedly sent to Apple's 60,000 or so employees, Tim Cook, the company's chief executive said that Apple "cares about every worker in its supply chain".

The letter appears to be in response to a series of articles in the New York Times cataloguing the company's problems in China and divisions within Apple about how to handle the issues.

The paper said more than half of the suppliers audited by Apple have broken at least one part of its conduct code each year since 2007 and have even broken the law in some cases.

"Most people would still be really disturbed if they saw where their iPhone comes from," one unnamed former Apple executive told the newspaper.

Mr Cook's letter, which was reproduced on the website 9to5mac.com, promised that Apple would "continue to dig deeper" into problems in China and that it would "undoubtedly find more issues". "What will not do, and never have done, is stand still or turn a blind eye to problems in our supply chain," he added.

"Any accident is deeply troubling, and any issue with working conditions is cause for concern. Any suggestion that we don't care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It's not who we are," he said.

As criticism has mounted of Apple, and threatened to tarnish the company's brand, its shares have risen to record highs, especially after the company said it had doubled its profits in the first three months to $13.1 billion (£8.35 billion) because of sales of its gadgets over Christmas.

Apple has monitored its factories in China since 2007, but has so far failed to significantly improve working conditions or safety. In fact, as sales of Apple's gadgets have soared, putting intense pressure on the company's suppliers to ramp up production, a spate of suicides, explosions and poisonings have occurred.

As Apple has improved and extended its monitoring, its annual reports have shown conditions worsening. In the company's latest report, it found at least 90 factories were asking workers to work for more than 60 hours a week, the company's own guidelines, which are themselves significantly over the 40-hour limit imposed by Chinese law. Apple also found five cases of child labour at factories.

In response to outside pressure, Apple this year published a list of its 156 suppliers, representing almost all its supply chain, for the first time. It also joined the Fair Labor Association, becoming the first technology company to do so. Apple has also worked with Chinese labour rights advocates, environmental groups, and has agreed to allow outside monitors into its suppliers' factories.

Nike, the athletic company, was a founding member of the FLA after it suffered intense criticism in the 1990s for using sweatshops in Asia.

Auret van Heerden, the president of the FLA, told Bloomberg that Apple is now going through a similar process. "Most big corporations have their 'Nike moment' at some stage, when they realise the difficulties of maintaining their standards, particularly in an increasingly global environment," he said.

However, Mr Van Heerden added that Apple's factories, including Foxconn, remained some of the best places to work as an unskilled labourer in the developing world. "If you are a 16-year-old girl in a developing country, your best chance of enjoying proper rights is if you get to work at a multinational company," said Mr Van Heerden. "The power of their contract is more powerful than the power of law".

Foxconn, which came under intense criticism for its "military" style working conditions, said 8,000 people apply to work at its factories every day. More than a million people work at Foxconn, but the Taiwanese company has a tin ear for public relations, with its chief executive having to recently apologise for comparing the management of his workers to the management of zoo animals.

One of China's leading labour advocacy groups, China Labor Bulletin, asked if Apple had the power to improve the lot of its workers. Only three companies in China - Foxconn, Pegatron and Quanta - have the ability to mass-manufacture Apple's products competently and on deadline. And they are being pushed to ever thinner profit margins for their work.

"It would seem that sharing profits with suppliers could be one way in which Apple could improve working conditions," wrote William Nee of CLB on his blog. "But then again, this voluntary step would fly against market dynamics and there is no guarantee that suppliers would pass the benefits onto the workers [...] What incentive does Foxconn have to improve standards if they know full well that Apple's entire business model relies on them?" Mr Nee said there were "no easy answers" to the problem.

Meanwhile, the New York Times reports on Apple have drawn a measured response inside China, with many commenters pointing out that other technology companies are equally guilty of worker abuse, and that further regulation could make lives for the workers worse.

"Construction workers and farmers are also living a harsh life in China, shall we also boycott housing and grains," asked Zhou Zhimei, one commenter. Another said the conditions in the factories should be better policed by the Chinese regulator, whose responsibility it was.

"If Foxconn were to abide by the labour law, the wages would be lower.

If workers establish a formal union, lots will be disappointed and return home to rural areas. The production cost of Chinese manufacturing will increase and Chinese factories will lose their competitive advantage. Who would be happy if that really happened?"

asked another commenter.

2012-01-26T09:36:00.000-08:00

Top Stories...

In China, Human Costs Are Built Into an iPad

2012-01-26T09:34:00.000-08:00

Source: New York Times By Charles Duhigg and David Barboza

The explosion ripped through Building A5 on a Friday evening last May, an eruption of fire and noise that twisted metal pipes as if they were discarded straws.

When workers in the cafeteria ran outside, they saw black smoke pouring from shattered windows. It came from the area where employees polished thousands of iPad cases a day.

Two people were killed immediately, and over a dozen others hurt. As the injured were rushed into ambulances, one in particular stood out. His features had been smeared by the blast, scrubbed by heat and violence until a mat of red and black had replaced his mouth and nose.

“Are you Lai Xiaodong’s father?” a caller asked when the phone rang at Mr. Lai’s childhood home. Six months earlier, the 22-year-old had moved to Chengdu, in southwest China, to become one of the millions of human cogs powering the largest, fastest and most sophisticated manufacturing system on earth. That system has made it possible for Apple and hundreds of other companies to build devices almost as quickly as they can be dreamed up.

“He’s in trouble,” the caller told Mr. Lai’s father. “Get to the hospital as soon as possible.”

In the last decade, Apple has become one of the mightiest, richest and most successful companies in the world, in part by mastering global manufacturing. Apple and its high-technology peers — as well as dozens of other American industries — have achieved a pace of innovation nearly unmatched in modern history.

However, the workers assembling iPhones, iPads and other devices often labor in harsh conditions, according to employees inside those plants, worker advocates and documents published by companies themselves. Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.

Employees work excessive overtime, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they can hardly walk. Under-age workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.

More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens. Within seven months last year, two explosions at iPad factories, including in Chengdu, killed four people and injured 77. Before those blasts, Apple had been alerted to hazardous conditions inside the Chengdu plant, according to a Chinese group that published that warning.

“If Apple was warned, and didn’t act, that’s reprehensible,” said Nicholas Ashford, a former chairman of the National Advisory Committee on Occupational Safety and Health, a group that advises the United States Labor Department. “But what’s morally repugnant in one country is accepted business practices in another, and companies take advantage of that.”

Apple is not the only electronics company doing business within a troubling supply system. Bleak working conditions have been documented at factories manufacturing products for Dell, Hewlett-Packard, I.B.M., Lenovo, Motorola, Nokia, Sony, Toshiba and others.

Current and former Apple executives, moreover, say the company has made significant strides in improving factories in recent years. Apple has a supplier code of conduct that details standards on labor issues, safety protections and other topics. The company has mounted a vigorous auditing campaign, and when abuses are discovered, Apple says, corrections are demanded.

And Apple’s annual supplier responsibility reports, in many cases, are the first to report abuses. This month, for the first time, the company released a list identifying many of its suppliers.

But significant problems remain. More than half of the suppliers audited by Apple have violated at least one aspect of the code of conduct every year since 2007, according to Apple’s reports, and in some instances have violated the law. While many violations involve working conditions, rather than safety hazards, troubling patterns persist.

“Apple never cared about anything other than increasing product quality and decreasing production cost,” said Li Mingqi, who until April worked in management at Foxconn Technology, one of Apple’s most important manufacturing partners. Mr. Li, who is suing Foxconn over his dismissal, helped manage the Chengdu factory where the explosion occurred.

“Workers’ welfare has nothing to do with their interests,” he said.

Some former Apple executives say there is an unresolved tension within the company: executives want to improve conditions within factories, but that dedication falters when it conflicts with crucial supplier relationships or the fast delivery of new products. Tuesday, Apple reported one of the most lucrative quarters of any corporation in history, with $13.06 billion in profits on $46.3 billion in sales. Its sales would have been even higher, executives said, if overseas factories had been able to produce more.

Executives at other corporations report similar internal pressures. This system may not be pretty, they argue, but a radical overhaul would slow innovation. Customers want amazing new electronics delivered every year.

“We’ve known about labor abuses in some factories for four years, and they’re still going on,” said one former Apple executive who, like others, spoke on the condition of anonymity because of confidentiality agreements. “Why? Because the system works for us. Suppliers would change everything tomorrow if Apple told them they didn’t have another choice.”

“If half of iPhones were malfunctioning, do you think Apple would let it go on for four years?” the executive asked.

Apple, in its published reports, has said it requires every discovered labor violation to be remedied, and suppliers that refuse are terminated. Privately, however, some former executives concede that finding new suppliers is time-consuming and costly. Foxconn is one of the few manufacturers in the world with the scale to build sufficient numbers of iPhones and iPads. So Apple is “not going to leave Foxconn and they’re not going to leave China,” said Heather White, a research fellow at Harvard and a former member of the Monitoring International Labor Standards committee at the National Academy of Sciences. “There’s a lot of rationalization.”

Apple was provided with extensive summaries of this article, but the company declined to comment. The reporting is based on interviews with more than three dozen current or former employees and contractors, including a half-dozen current or former executives with firsthand knowledge of Apple’s supplier responsibility group, as well as others within the technology industry.

In 2010, Steven P. Jobs discussed the company’s relationships with suppliers at an industry conference.

“I actually think Apple does one of the best jobs of any companies in our industry, and maybe in any industry, of understanding the working conditions in our supply chain,” said Mr. Jobs, who was Apple’s chief executive at the time and who died last October.

“I mean, you go to this place, and, it’s a factory, but, my gosh, I mean, they’ve got restaurants and movie theaters and hospitals and swimming pools, and I mean, for a factory, it’s a pretty nice factory.”

Others, including workers inside such plants, acknowledge the cafeterias and medical facilities, but insist conditions are punishing.

“We’re trying really hard to make things better,” said one former Apple executive. “But most people would still be really disturbed if they saw where their iPhone comes from.”

The Road to Chengdu

In the fall of 2010, about six months before the explosion in the iPad factory, Lai Xiaodong carefully wrapped his clothes around his college diploma, so it wouldn’t crease in his suitcase. He told friends he would no longer be around for their weekly poker games, and said goodbye to his teachers. He was leaving for Chengdu, a city of 12 million that was rapidly becoming one of the world’s most important manufacturing hubs.

Though painfully shy, Mr. Lai had surprised everyone by persuading a beautiful nursing student to become his girlfriend. She wanted to marry, she said, and so his goal was to earn enough money to buy an apartment.

Factories in Chengdu manufacture products for hundreds of companies. But Mr. Lai was focused on Foxconn Technology, China’s largest exporter and one of the nation’s biggest employers, with 1.2 million workers. The company has plants throughout China, and assembles an estimated 40 percent of the world’s consumer electronics, including for customers like Amazon, Dell, Hewlett-Packard, Nintendo, Nokia and Samsung.

Foxconn’s factory in Chengdu, Mr. Lai knew, was special. Inside, workers were building Apple’s latest, potentially greatest product: the iPad.

When Mr. Lai finally landed a job repairing machines at the plant, one of the first things he noticed were the almost blinding lights. Shifts ran 24 hours a day, and the factory was always bright. At any moment, there were thousands of workers standing on assembly lines or sitting in backless chairs, crouching next to large machinery, or jogging between loading bays. Some workers’ legs swelled so much they waddled. “It’s hard to stand all day,” said Zhao Sheng, a plant worker.

Banners on the walls warned the 120,000 employees: “Work hard on the job today or work hard to find a job tomorrow.” Apple’s supplier code of conduct dictates that, except in unusual circumstances, employees are not supposed to work more than 60 hours a week. But at Foxconn, some worked more, according to interviews, workers’ pay stubs and surveys by outside groups. Mr. Lai was soon spending 12 hours a day, six days a week inside the factory, according to his paychecks. Employees who arrived late were sometimes required to write confession letters and copy quotations. There were “continuous shifts,” when workers were told to work two stretches in a row, according to interviews.

Mr. Lai’s college degree enabled him to earn a salary of around $22 a day, including overtime — more than many others. When his days ended, he would retreat to a small bedroom just big enough for a mattress, wardrobe and a desk where he obsessively played an online game called Fight the Landlord, said his girlfriend, Luo Xiaohong.

Those accommodations were better than many of the company’s dorms, where 70,000 Foxconn workers lived, at times stuffed 20 people to a three-room apartment, employees said. Last year, a dispute over paychecks set off a riot in one of the dormitories, and workers started throwing bottles, trash cans and flaming paper from their windows, according to witnesses. Two hundred police officers wrestled with workers, arresting eight. Afterward, trash cans were removed, and piles of rubbish — and rodents — became a problem. Mr. Lai felt lucky to have a place of his own.

Foxconn, in a statement, disputed workers’ accounts of continuous shifts, extended overtime, crowded living accommodations and the causes of the riot. The company said that its operations adhered to customers’ codes of conduct, industry standards and national laws. “Conditions at Foxconn are anything but harsh,” the company wrote. Foxconn also said that it had never been cited by a customer or government for under-age or overworked employees or toxic exposures.

“All assembly line employees are given regular breaks, including one-hour lunch breaks,” the company wrote, and only 5 percent of assembly line workers are required to stand to carry out their tasks. Work stations have been designed to ergonomic standards, and employees have opportunities for job rotation and promotion, the statement said.

“Foxconn has a very good safety record,” the company wrote. “Foxconn has come a long way in our efforts to lead our industry in China in areas such as workplace conditions and the care and treatment of our employees.”

Apple’s Code of Conduct

In 2005, some of Apple’s top executives gathered inside their Cupertino, Calif., headquarters for a special meeting. Other companies had created codes of conduct to police their suppliers. It was time, Apple decided, to follow suit. The code Apple published that year demands “that working conditions in Apple’s supply chain are safe, that workers are treated with respect and dignity, and that manufacturing processes are environmentally responsible.”

But the next year, a British newspaper, The Mail on Sunday, secretly visited a Foxconn factory in Shenzhen, China, where iPods were manufactured, and reported on workers’ long hours, push-ups meted out as punishment and crowded dorms. Executives in Cupertino were shocked. “Apple is filled with really good people who had no idea this was going on,” a former employee said. “We wanted it changed, immediately.”

Apple audited that factory, the company’s first such inspection, and ordered improvements. Executives also undertook a series of initiatives that included an annual audit report, first published in 2007. By last year, Apple had inspected 396 facilities — including the company’s direct suppliers, as well as many of those suppliers’ suppliers — one of the largest such programs within the electronics industry.

Those audits have found consistent violations of Apple’s code of conduct, according to summaries published by the company. In 2007, for instance, Apple conducted over three dozen audits, two-thirds of which indicated that employees regularly worked more than 60 hours a week. In addition, there were six “core violations,” the most serious kind, including hiring 15-year-olds as well as falsifying records.

Over the next three years, Apple conducted 312 audits, and every year, about half or more showed evidence of large numbers of employees laboring more than six days a week as well as working extended overtime. Some workers received less than minimum wage or had pay withheld as punishment. Apple found 70 core violations over that period, including cases of involuntary labor, under-age workers, record falsifications, improper disposal of hazardous waste and over a hundred workers injured by toxic chemical exposures.

Last year, the company conducted 229 audits. There were slight improvements in some categories and the detected rate of core violations declined. However, within 93 facilities, at least half of workers exceeded the 60-hours-a-week work limit. At a similar number, employees worked more than six days a week. There were incidents of discrimination, improper safety precautions, failure to pay required overtime rates and other violations. That year, four employees were killed and 77 injured in workplace explosions.

“If you see the same pattern of problems, year after year, that means the company’s ignoring the issue rather than solving it,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “Noncompliance is tolerated, as long as the suppliers promise to try harder next time. If we meant business, core violations would disappear.”

Apple says that when an audit reveals a violation, the company requires suppliers to address the problem within 90 days and make changes to prevent a recurrence. “If a supplier is unwilling to change, we terminate our relationship,” the company says on its Web site.

The seriousness of that threat, however, is unclear. Apple has found violations in hundreds of audits, but fewer than 15 suppliers have been terminated for transgressions since 2007, according to former Apple executives.

“Once the deal is set and Foxconn becomes an authorized Apple supplier, Apple will no longer give any attention to worker conditions or anything that is irrelevant to its products,” said Mr. Li, the former Foxconn manager. Mr. Li spent seven years with Foxconn in Shenzhen and Chengdu and was forced out in April after he objected to a relocation to Chengdu, he said. Foxconn disputed his comments, and said “both Foxconn and Apple take the welfare of our employees very seriously.”

Apple’s efforts have spurred some changes. Facilities that were reaudited “showed continued performance improvements and better working conditions,” the company wrote in its 2011 supplier responsibility progress report. In addition, the number of audited facilities has grown every year, and some executives say those expanding efforts obscure year-to-year improvements.

Apple also has trained over a million workers about their rights and methods for injury and disease prevention. A few years ago, after auditors insisted on interviewing low-level factory employees, they discovered that some had been forced to pay onerous “recruitment fees” — which Apple classifies as involuntary labor. As of last year, the company had forced suppliers to reimburse more than $6.7 million in such charges.

“Apple is a leader in preventing under-age labor,” said Dionne Harrison of Impactt, a firm paid by Apple to help prevent and respond to child labor among its suppliers. “They’re doing as much as they possibly can.”

Other consultants disagree.

“We’ve spent years telling Apple there are serious problems and recommending changes,” said a consultant at BSR — also known as Business for Social Responsibility — which has been twice retained by Apple to provide advice on labor issues. “They don’t want to pre-empt problems, they just want to avoid embarrassments.”

‘We Could Have Saved Lives’

In 2006, BSR, along with a division of the World Bank and other groups, initiated a project to improve working conditions in factories building cellphones and other devices in China and elsewhere. The groups and companies pledged to test various ideas. Foxconn agreed to participate.

For four months, BSR and another group negotiated with Foxconn regarding a pilot program to create worker “hotlines,” so that employees could report abusive conditions, seek mental counseling and discuss workplace problems. Apple was not a participant in the project, but was briefed on it, according to the BSR consultant, who had detailed knowledge.

As negotiations proceeded, Foxconn’s requirements for participation kept changing. First Foxconn asked to shift from installing new hotlines to evaluating existing hotlines. Then Foxconn insisted that mental health counseling be excluded. Foxconn asked participants to sign agreements saying they would not disclose what they observed, and then rewrote those agreements multiple times. Finally, an agreement was struck, and the project was scheduled to begin in January 2008. A day before the start, Foxconn demanded more changes, until it was clear the project would not proceed, according to the consultant and a 2008 summary by BSR that did not name Foxconn.

The next year, a Foxconn employee fell or jumped from an apartment building after losing an iPhone prototype. Over the next two years, at least 18 other Foxconn workers attempted suicide or fell from buildings in manners that suggested suicide attempts. In 2010, two years after the pilot program fell apart and after multiple suicide attempts, Foxconn created a dedicated mental health hotline and began offering free psychological counseling.

“We could have saved lives, and we asked Apple to pressure Foxconn, but they wouldn’t do it,” said the BSR consultant, who asked not to be identified because of confidentiality agreements. “Companies like H.P. and Intel and Nike push their suppliers. But Apple wants to keep an arm’s length, and Foxconn is their most important manufacturer, so they refuse to push.”

BSR, in a written statement, said the views of that consultant were not those of the company.

“My BSR colleagues and I view Apple as a company that is making a highly serious effort to ensure that labor conditions in its supply chain meet the expectations of applicable laws, the company’s standards and the expectations of consumers,” wrote Aron Cramer, BSR’s president. Mr. Cramer added that asking Apple to pressure Foxconn would have been inconsistent with the purpose of the pilot program, and there were multiple reasons the pilot program did not proceed.

Foxconn, in a statement, said it acted quickly and comprehensively to address suicides, and “the record has shown that those measures have been successful.”

A Demanding Client

Every month, officials at companies from around the world trek to Cupertino or invite Apple executives to visit their foreign factories, all in pursuit of a goal: becoming a supplier.

When news arrives that Apple is interested in a particular product or service, small celebrations often erupt. Whiskey is drunk. Karaoke is sung.

Then, Apple’s requests start.

Apple typically asks suppliers to specify how much every part costs, how many workers are needed and the size of their salaries. Executives want to know every financial detail. Afterward, Apple calculates how much it will pay for a part. Most suppliers are allowed only the slimmest of profits.

So suppliers often try to cut corners, replace expensive chemicals with less costly alternatives, or push their employees to work faster and longer, according to people at those companies.

“The only way you make money working for Apple is figuring out how to do things more efficiently or cheaper,” said an executive at one company that helped bring the iPad to market. “And then they’ll come back the next year, and force a 10 percent price cut.”

In January 2010, workers at a Chinese factory owned by Wintek, an Apple manufacturing partner, went on strike over a variety of issues, including widespread rumors that workers were being exposed to toxins. Investigations by news organizations revealed that over a hundred employees had been injured by n-hexane, a toxic chemical that can cause nerve damage and paralysis.

Employees said they had been ordered to use n-hexane to clean iPhone screens because it evaporated almost three times as fast as rubbing alcohol. Faster evaporation meant workers could clean more screens each minute.

Apple commented on the Wintek injuries a year later. In its supplier responsibility report, Apple said it had “required Wintek to stop using n-hexane” and that “Apple has verified that all affected workers have been treated successfully, and we continue to monitor their medical reports until full recuperation.” Apple also said it required Wintek to fix the ventilation system.

That same month, a New York Times reporter interviewed a dozen injured Wintek workers who said they had never been contacted by Apple or its intermediaries, and that Wintek had pressured them to resign and take cash settlements that would absolve the company of liability. After those interviews, Wintek pledged to provide more compensation to the injured workers and Apple sent a representative to speak with some of them.

Six months later, trade publications reported that Apple significantly cut prices paid to Wintek.

“You can set all the rules you want, but they’re meaningless if you don’t give suppliers enough profit to treat workers well,” said one former Apple executive with firsthand knowledge of the supplier responsibility group. “If you squeeze margins, you’re forcing them to cut safety.”

Wintek is still one of Apple’s most important suppliers. Wintek, in a statement, declined to comment except to say that after the episode, the company took “ample measures” to address the situation and “is committed to ensuring employee welfare and creating a safe and healthy work environment.”

Many major technology companies have worked with factories where conditions are troubling. However, independent monitors and suppliers say some act differently. Executives at multiple suppliers, in interviews, said that Hewlett-Packard and others allowed them slightly more profits and other allowances if they were used to improve worker conditions.

“Our suppliers are very open with us,” said Zoe McMahon, an executive in Hewlett-Packard’s supply chain social and environmental responsibility program. “They let us know when they are struggling to meet our expectations, and that influences our decisions.”

The Explosion

On the afternoon of the blast at the iPad plant, Lai Xiaodong telephoned his girlfriend, as he did every day. They had hoped to see each other that evening, but Mr. Lai’s manager said he had to work overtime, he told her.

He had been promoted quickly at Foxconn, and after just a few months was in charge of a team that maintained the machines that polished iPad cases. The sanding area was loud and hazy with aluminum dust. Workers wore masks and earplugs, but no matter how many times they showered, they were recognizable by the slight aluminum sparkle in their hair and at the corners of their eyes.

Just two weeks before the explosion, an advocacy group in Hong Kong published a report warning of unsafe conditions at the Chengdu plant, including problems with aluminum dust. The group, Students and Scholars Against Corporate Misbehavior, or Sacom, had videotaped workers covered with tiny aluminum particles. “Occupational health and safety issues in Chengdu are alarming,” the report read. “Workers also highlight the problem of poor ventilation and inadequate personal protective equipment.”

A copy of that report was sent to Apple. “There was no response,” said Debby Chan Sze Wan of the group. “A few months later I went to Cupertino, and went into the Apple lobby, but no one would meet with me. I’ve never heard from anyone from Apple at all.”

The morning of the explosion, Mr. Lai rode his bicycle to work. The iPad had gone on sale just weeks earlier, and workers were told thousands of cases needed to be polished each day. The factory was frantic, employees said. Rows of machines buffed cases as masked employees pushed buttons. Large air ducts hovered over each station, but they could not keep up with the three lines of machines polishing nonstop. Aluminum dust was everywhere.

Dust is a known safety hazard. In 2003, an aluminum dust explosion in Indiana destroyed a wheel factory and killed a worker. In 2008, agricultural dust inside a sugar factory in Georgia caused an explosion that killed 14.

Two hours into Mr. Lai’s second shift, the building started to shake, as if an earthquake was under way. There was a series of blasts, plant workers said.

Then the screams began.

When Mr. Lai’s colleagues ran outside, dark smoke was mixing with a light rain, according to cellphone videos. The toll would eventually count four dead, 18 injured.

At the hospital, Mr. Lai’s girlfriend saw that his skin was almost completely burned away. “I recognized him from his legs, otherwise I wouldn’t know who that person was,” she said.

Eventually, his family arrived. Over 90 percent of his body had been seared. “My mom ran away from the room at the first sight of him. I cried. Nobody could stand it,” his brother said. When his mother eventually returned, she tried to avoid touching her son, for fear that it would cause pain.

“If I had known,” she said, “I would have grabbed his arm, I would have touched him.”

“He was very tough,” she said. “He held on for two days.”

After Mr. Lai died, Foxconn workers drove to Mr. Lai’s hometown and delivered a box of ashes. The company later wired a check for about $150,000.

Foxconn, in a statement, said that at the time of the explosion the Chengdu plant was in compliance with all relevant laws and regulations, and “after ensuring that the families of the deceased employees were given the support they required, we ensured that all of the injured employees were given the highest quality medical care.” After the explosion, the company added, Foxconn immediately halted work in all polishing workshops, and later improved ventilation and dust disposal, and adopted technologies to enhance worker safety.

In its most recent supplier responsibility report, Apple wrote that after the explosion, the company contacted “the foremost experts in process safety” and assembled a team to investigate and make recommendations to prevent future accidents.

In December, however, seven months after the blast that killed Mr. Lai, another iPad factory exploded, this one in Shanghai. Once again, aluminum dust was the cause, according to interviews and Apple’s most recent supplier responsibility report. That blast injured 59 workers, with 23 hospitalized.

“It is gross negligence, after an explosion occurs, not to realize that every factory should be inspected,” said Nicholas Ashford, the occupational safety expert, who is now at the Massachusetts Institute of Technology. “If it were terribly difficult to deal with aluminum dust, I would understand. But do you know how easy dust is to control? It’s called ventilation. We solved this problem over a century ago.”

In its most recent supplier responsibility report, Apple wrote that while the explosions both involved combustible aluminum dust, the causes were different. The company declined, however, to provide details. The report added that Apple had now audited all suppliers polishing aluminum products and had put stronger precautions in place. All suppliers have initiated required countermeasures, except one, which remains shut down, the report said.

For Mr. Lai’s family, questions remain. “We’re really not sure why he died,” said Mr. Lai’s mother, standing beside a shrine she built near their home. “We don’t understand what happened.”

Hitting the Apple Lottery

Every year, as rumors about Apple’s forthcoming products start to emerge, trade publications and Web sites begin speculating about which suppliers are likely to win the Apple lottery. Getting a contract from Apple can lift a company’s value by millions because of the implied endorsement of manufacturing quality. But few companies openly brag about the work: Apple generally requires suppliers to sign contracts promising they will not divulge anything, including the partnership.

That lack of transparency gives Apple an edge at keeping its plans secret. But it also has been a barrier to improving working conditions, according to advocates and former Apple executives.

This month, after numerous requests by advocacy and news organizations, including The New York Times, Apple released the names of 156 of its suppliers. In the report accompanying that list, Apple said they “account for more than 97 percent of what we pay to suppliers to manufacture our products.”

However, the company has not revealed the names of hundreds of other companies that do not directly contract with Apple, but supply the suppliers. The company’s supplier list does not disclose where factories are, and many are hard to find. And independent monitoring organizations say when they have tried to inspect Apple’s suppliers, they have been barred from entry — on Apple’s orders, they have been told.

“We’ve had this conversation hundreds of times,” said a former executive in Apple’s supplier responsibility group. “There is a genuine, companywide commitment to the code of conduct. But taking it to the next level and creating real change conflicts with secrecy and business goals, and so there’s only so far we can go.” Former Apple employees say they were generally prohibited from engaging with most outside groups.

“There’s a real culture of secrecy here that influences everything,” the former executive said.

Some other technology companies operate differently.

“We talk to a lot of outsiders,” said Gary Niekerk, director of corporate citizenship at Intel. “The world’s complex, and unless we’re dialoguing with outside groups, we miss a lot.”

Given Apple’s prominence and leadership in global manufacturing, if the company were to radically change its ways, it could overhaul how business is done. “Every company wants to be Apple,” said Sasha Lezhnev at the Enough Project, a group focused on corporate accountability. “If they committed to building a conflict-free iPhone, it would transform technology.”

But ultimately, say former Apple executives, there are few real outside pressures for change. Apple is one of the most admired brands. In a national survey conducted by The New York Times in November, 56 percent of respondents said they couldn’t think of anything negative about Apple. Fourteen percent said the worst thing about the company was that its products were too expensive. Just 2 percent mentioned overseas labor practices.

People like Ms. White of Harvard say that until consumers demand better conditions in overseas factories — as they did for companies like Nike and Gap, which today have overhauled conditions among suppliers — or regulators act, there is little impetus for radical change. Some Apple insiders agree.

“You can either manufacture in comfortable, worker-friendly factories, or you can reinvent the product every year, and make it better and faster and cheaper, which requires factories that seem harsh by American standards,” said a current Apple executive.

“And right now, customers care more about a new iPhone than working conditions in China.”

2012 likely to see clearout of China's group-buying sector

2012-01-26T09:27:00.000-08:00

Source: China Want Times

China's group-buying websites are set to face a test of their survival in 2012 after a year of rapid growth followed by decline in the sector which has already forced out nearly a quarter of enterprises, the China Business Journal reports.

According to Tuan800, an online portal charting group-buying websites in China, the number of websites in the sector has dropped to around 3,907 from its peak of 5,058 last September.

The newspaper said the sector's low entry barriers, simple business model and the earlier appeal it held for the capital market attracted many firms to throw in their lot. However, most group-buying websites have been cash-burning operations and have experienced a market slowdown, seeing their prospects of earning profits wither amid further tightening funding.

The competition between group-buying websites intensified after social networking website Renren's initial public offering (IPO) in the United States in May 2011, as a public listing was seen as the ultimate goal for these online businesses, the newspaper said.

However, Renren's financial statement revealed widening losses at its group-buying operation, Nuomi, reversing the company's profitability and causing a net loss.

In addition, accounting scandals and a possible bubble in China's technology sector have led to the delay or cancellation of the plans of several group-buying websites to go public, including the latest one by 55tuan, which was reported by International Financing Review Asia, a magazine produced by Thomson Reuters.

While Lashou, one of China's market leaders in the sector, also cancelled its planned US listing in November, Ftuan CEO Lin Ning said his website is not considering going public for the moment.

"The winter of the capital market is expected to extend into 2012. Even if a company completes its listing, it still has to face the risk of its value being underestimated," said internet expert Lu Bowang. "If a company is unable to resolve its internal issues or find a viable business model, an IPO will not be the best solution."

Meituan has become the outright market leader in the meantime, having garnered a 17% share after the fierce competition of 2011. Other changes in the sector include Lashou's entry into online shopping and Ftuan receiving investments from Tencent and tying up with social networking website Kaixin.

The sector also witnessed a drop in gross profit margins — from 15%-18% at the end of 2010 to below 5% in 2011 — the newspaper said, adding that only leading websites were able to maintain a margin of 10%.

Meituan CEO Wang Xing said the sector's top priority is to ensure customer satisfaction and to establish a competitive edge in the sale of physical products. He added that there continues to be a great untapped business opportunity in the area of local services.

Yet Xiao Min, vice president at venture capital firm Matrix Partners China, expects many group-buying websites to face strong pressure to go under around Chinese New Year in late January, with the number of businesses in the sector falling further by mid-2012.

2012-01-25T09:48:00.000-08:00

Top Stories...

Apple ‘Didn’t Bet High Enough’ on Chinese Demand for IPhone 4S, Cook Says

2012-01-25T09:47:00.001-08:00

Source: Bloomberg News

Apple Inc. (AAPL) underestimated the “staggering” demand for the iPhone 4S when it started sales in China this month, Chief Executive Officer Tim Cook said.

“We thought we were betting bold,” Cook said about sales of the device in China on a conference call yesterday. “We didn’t bet high enough.”

Crowds pelted Apple’s oldest store in China with eggs on Jan. 13 when the shop in Beijing’s Sanlitun district failed to open on the first day of sales for the iPhone 4S. After Beijing police sealed off the area to remove more than 500 people, Apple announced that it would suspend sales of iPhones at all stores in Beijing and Shanghai “for the time being” to ensure safety.

With sales halted at its China retail outlets, Apple is now offering the iPhone in the world’s largest mobile phone market through its online store, carrier partner China Unicom (Hong Kong) Ltd., and authorized resellers. The company’s online store in China is currently sold out of the iPhone 4S.

Chinese demand for the handset is “off the charts,” Cook said on the call.

Apple, based in Cupertino, California, this month moved closer to expanding its distribution in China through a second carrier partner when regulators approved specifications for a device that would run on the network of China Telecom Corp. (728), the nation’s third-largest wireless carrier.

Cook declined to answer questions about when a second carrier would be added in China.

‘Key Partner’

“China Unicom continues to be a very key partner,” he said on the call. “I’ve got nothing to announce today on an expansion there, but as I’ve consistently said, China is an extremely important market for us and we continue to look at how to grow it further.”

Apple announced yesterday that quarterly profit more than doubled to $13.1 billion in the period that ended Dec. 31 on surging demand for the iPhone and iPad.

The company sold 5.6 million iPhones in China during the first nine months of last year, making it the No. 4 smartphone vendor in the country in the third quarter, according to Stamford, Connecticut-based research company Gartner Inc.

Huawei India Expects Consumer Devices Sales to Grow

2012-01-25T09:46:00.000-08:00

Source: Wall Street Journal By Kenan Machado

MUMBAI -- The Indian unit of Huawei Technologies Co. expects its revenue from sales of consumer devices to increase 25% this fiscal year, helped by growing demand for products such as smartphones and equipment that help people connect to the Internet, a senior executive said.

The telecommunications equipment maker expects about $500 million from sales of consumer devices in India in the fiscal year through March, compared with about $400 million last year, Marketing Director Anand Narang said in a recent interview.

India is one of the top five markets for Huawei, accounting for nearly 10% of its revenue in 2011. China-based Huawei's financial year runs from January to December, while that of its Indian unit is from April-March.

In India, it gets about 40% of revenue from consumer devices, which also include television set-top boxes. Its other main divisions are the network business division for telecom carriers, which makes up 35%-40%, and the enterprise division that sells networking products to non-telecom customers.

In the consumer devices division, it gets 40% of revenue from set-top boxes, which are used to decode TV signals, and the rest equally from Internet data cards and smartphones.

Its business of selling Internet cards and smartphones to telecom companies is facing pricing pressure, Mr. Narang said in the recent interview. Huawei makes these devices for companies which sell them under their own brands.

Rising debt costs and low tariffs have forced phone companies to seek lower prices from vendors such as Huawei, Mr. Narang said. But increased volumes will help Huawei offset the price pressure, he added.

To counter the pricing pressure, the company is planning to increase the sales of its self-branded devices where margins are better, Mr. Narang said.

Huawei declined to disclose its earnings margins for India.

It expects to increase retail sales of its branded devices to 20%-30% of overall revenue in the next five fiscal years, from 1% now, Mr. Narang said.

With the Indian government making it mandatory for cable operators to digitize their signals by December 2014, Huawei is witnessing strong demand for set-top boxes, Mr. Narang said.

It sold over 5.0 million set-top boxes in the last fiscal year, he said.

Sales of smartphones year to date have doubled from 4.0 million handsets last fiscal year, Narang said. Sales of Internet cards have grown 20%-25% from the 3.0 million sold in the last financial year, he added.

2012-01-24T12:28:00.000-08:00

Top Stories...

Google China Business Grows, ‘Continues to Thrive,’ Alegre Says

2012-01-24T12:26:00.000-08:00

Source: Bloomberg News By Susan Li and Brian Womack

Google (GOOG) Inc.’s business in China is growing and “continues to thrive” amid demand for advertising services in the world’s most populous country, said Daniel Alegre, president of the company’s Asia-Pacific operations.

Google ran afoul of Chinese authorities in 2010 for refusing to abide by local censorship rules. Amid the clash, the company shuttered its unfiltered search tools in China and instead began redirecting users to pages in Hong Kong.

Still, the company is focusing on products that are “non- sensitive” in China market, Alegre said in an interview with Bloomberg Television. Google is seeing strong demand for advertising with its mobile and desktop services, he said.

“We never left China, and we continue to believe in the market,” Alegre said. “It’s a very vibrant Internet market. We have some of the best employees at Google and we continue to grow not only our revenue but also our headcount in the country.”

Google, looking to grow beyond markets in the U.S. and Western Europe, aims to expand in China after losing search market share to Baidu Inc. (BIDU) China is the largest Internet market by users.

Google, based in Mountain View, California, was little changed at $585.52 yesterday in New York. The stock climbed 8.7 percent last year.

Chinese smartphone producers eye domestic market

2012-01-24T12:23:00.000-08:00

Source: Want China Times

As international mobile firms Nokia and Sony Ericsson continue to see average results in the smartphone market, several large Chinese technology firms, including Huawei, Lenovo, Haier, Konka and TCL, have announced their ambitions to foray into the market with a low-price strategy.

Domestic mobile-phone manufacturers Huawei and Lenovo rolled out their new mobile phones at the International Consumer Electronics Show, the world's largest consumer-technology tradeshow.

Huawei's latest smartphone, the Ascend P1S, is the world's thinnest smartphone, at 6.68mm. It has a 4.3-inch screen with resolution of 540 x 960.

The Beijing Business Today reports that Huawei's Ascend series will be launched in March in China, Europe, North America, the Asia-Pacific region and the Middle East.

Data shows that smartphones will drive an increase in global sales for Huawei. In 2011, Huawei's global sales reached US$6.7 billion, with its global shipments of more than 150 million units, both registering a sharp year-on-year growth. Smartphones shipments exceeded 20 million units.

Aside from Huawei, a number of large electronics firms have been attracted to the smartphone market.

The latest research data released by consulting firm Strategy Analyics showed that in the third quarter of 2011, China's smartphone shipments reached 23.9 million units, surpassing the US' 23.3 million units, making China the world's largest smartphone market by shipments.

Industry insiders have mixed views about domestic manufacturers' scramble to enter the market.

Zeng Jianqiu, a professor at the Beijing University of Posts and Telecommunications, said Chinese domestic enterprises were developing a competitive edge. China is the world's largest cell-phone market and the fastest-growing smartphone market, while some local enterprises have made great progress in smartphone production, Zeng added.

Xiang Ligang, CEO of telecom portal cctime.com, said copycats in the Chinese market show a lack of innovation in the domestic mobile-phone market.

Currently, Chinese smartphones consist mainly of high-end foreign brands and low-end domestic brands, making it difficult for locally produced phones to compete in the market.

An industry expert said that due to the prevalence of low-priced smartphones in China, a new smartphone market had been created in the country, increasing competitive pressure on foreign manufacturers, such as Apple.

2012-01-23T10:31:00.000-08:00

Top Stories...

Foreign firms eye China's crowded express delivery market

2012-01-23T10:28:00.001-08:00

Source: Reuters | Photo: Bloomberg

(Reuters) - When 70-year-old Qian Yongfang of Nanjing in eastern China opened a package of mooncakes her daughter had sent by express delivery, two boxes of the sweet pastries were missing.

When He Ling, an online clothes seller, receives orders at peak seasons, she has to warn customers that what usually is a three-day delivery could take up to two weeks.

And when college student Ma Kun, 21, received a jar of preserved prunes sent by her parents, it was broken during delivery.

"I've learned to lower my expectations of Chinese delivery companies," Ma said.

Such complaints plague China's fragmented but booming express delivery industry, where delay, damage and outright loss of packages persistently erode Chinese operators' reliability and reputations.

This should be a huge business opportunity for foreign companies such as FedEx Corp and United Parcel Service Inc, which have vast experience in delivering packages around the planet and high-tech tracking and quality-assurance processes. But they are sparsely represented in China.

Foreign firms can deliver packages from abroad to destinations in China, but Chinese law forbids them from domestic delivery, packages sent between locations in China.

This year, however, some are hoping to take a bigger bite out of this expanding pie, applying for licenses for parcel delivery in the Chinese market.

The annual Lunar New Year, a week-long holiday that officially began on Monday, is one of the bigger annual headaches for the industry, with more than 200 million people traveling to hometowns across the country, jamming traffic and leaving express companies understaffed.

"With the new year around the corner, our orders are bound to soar with increasing demand from e-commerce and traditional business," said Cao Zhen, manager of corporate planning at STO Express, a Chinese delivery company with more than a quarter of the domestic market by volume. "But at the same time, we're severely short-handed, which creates even greater pressure."

China's express delivery business has seen phenomenal growth in the past five years, reaching 57.4 billion yuan ($9.1 billion) in 2010, almost twice the 30 billion yuan of 2006.

Revenue is expected to grow 30 percent in 2011, three times as fast as China's overall economic growth, says Shao Zhonglin, deputy secretary general of the China Express Association.

E-COMMERCE AS ENGINE

China's surging e-commerce is a major force behind that growth, though it's also behind its malfunction in peak seasons.

Shao expects the volume of express delivery to grow 60 percent in 2011 from 2.3 billion packages in 2010, more than half coming from online shopping orders, especially Taobao, China's top e-commerce platform.

Taobao is a unit of Alibaba Group, partly owned by Yahoo Inc.

Last November an online campaign by Taobao racked up orders worth more than 5.2 billion yuan in one day, or six days' worth of retail business in all of Hong Kong.

That was equivalent to an average of about 10,000 packages generated by Taobao per minute on that day, saddling delivery carriers with a two-week backlog.

"Such online sales events are usually followed by many days of delay and missing orders, which then is inevitably followed by angry complaints from customers," said Lu Zhengyuan, an e-commerce equities analyst.

A key reason is the fragmented nature of the Chinese market, which has more than 7,000 local express operators, mostly franchises of 12 big companies. Some local operators, swamped with packages, even mobilise relatives to handle delivery.

"Final delivery to customers is by small businesses, where speed, a unified system and standard service can hardly be guaranteed," Lu said.

FOREIGN GIANTS READY

FedEx, UPS and other international express companies such as DHL Worldwide Express BV and TNT Express NV, currently are not active in the burgeoning domestic Chinese market, but want a slice of the pie in 2012.

DHL-Sinotrans, a DHL joint venture, was granted a domestic delivery license in 2010, making DHL the only foreign firm in the market.

However, DHL decided last July to sell its subsidiaries in China and withdrew from the domestic delivery business.

The ban on foreign companies delivering packages and documents within China was one factor behind the decision, DHL said.

"DHL will consider a return to the domestic market when the industry matures through consolidation and customers start to place more emphasis on quality services," DHL said in a statement emailed to Reuters.

Cut-throat price competition among Chinese companies also makes it tough for foreign operators to turn profits.

FedEx and UPS filed for licenses in 2010 to offer domestic express service, and a decision is expected within weeks.

Seeking domestic delivery in China is a "reaction to demands from clients," UPS said in an email to Reuters.

"Foreign express companies can provide a complete supply chain, with finance and storage services unrivaled by most Chinese companies," said one industry source who spoke on condition of anonymity.

"Instead of a new round of price competition, they will bring a useful complement to the market."

Foreign companies entering the domestic market are unlikely to have much influence on Chinese operators, said Cao, the STO manager, noting his company's local network and familiarity of the market.

"They're still fumbling about."

People such as college student Ma, however, don't think foreign competition would make much difference. "They won't have much advantage in cost-to-quality ratio. They're so expensive that delivery would cost as much as I spend online."

Nonetheless, Ma said she bought some clothes on Taobao two months ago, but the package has already been lost twice.

"I don't think it can arrive by the end of Chinese New Year, if it ever arrives at all."

($1 = 6.3390 yuan)

What is Apple's real strategy in China?

2012-01-23T10:27:00.000-08:00

Source: Want China Times

The iPhone 4S, the most recent edition of Apple's smartphone, has stirred a shopping spree in China since its release there last week. However, doubts are also emerging behind the scenes.

The iPhone 4S at three Apple stores in Shanghai sold out in less than three hours as the product hit the shelves last Friday while on the same day Apple's flagship stores in Beijing were closed down over security concerns as fights broke out among scalpers.

China's telecom network is still unable to fully support the entirety function of the iPhone and iPad's functions, resulting in a relatively poor performance for Apple compared to its South Korean rival Samsung. The growth of Apple's market share in China has doubled since the first quarter of 2010 but this is still less than Samsung's threefold growth of market share in the same period, according to the Hong Kong-based Oriental Daily News.

Furthermore, analysts said that Apple is certainly aware of the demand for its products in China but the company appears to conduct a marketing strategy based on a "hunger strategy" of releasing them in limited quantities. If this is not the US company's intention, this would reveal concerns over the company's production capacity, said analysts.

Apple announced that the company stopped sales of the iPhone 4S at Beijing and Shanghai's Apple stores over concerns for the safety of store workers and customers, only selling the phone on the company's online shops. However, no iPhone 4S was available for order online until last night, according to local media.

2012-01-20T10:18:00.000-08:00

Top Stories...

IPhone Scarcity During Chinese New Year May Give Samsung a Happy Holiday

2012-01-20T10:15:00.000-08:00

Source: Bloomberg News

Apple Inc. (AAPL) is missing out on Chinese New Year sales and giving competitors a potential boost after pulling all iPhones from company stores during the nation’s most important gift-giving season.

Apple stopped selling all handsets at its five China outlets on Jan. 13 after customers pelted the flagship store in Beijing with eggs because it wouldn’t open on the first day of sales for the iPhone 4S. The online store in China also sold out of the device.

The one-week holiday, which begins Jan. 23, generated $64 billion in retail sales last year, according to government statistics. Clearing iPhones from shelves in the 10 days leading into the Year of the Dragon may help Samsung Electronics Co. (005930) and other competitors using Google Inc.’s Android software increase their footholds in the world’s largest mobile-phone market.

“A large portion of Chinese New Year sales are about having the gifts in hand right now,” said David Wolf, chief executive officer of Wolf Group Asia, a Beijing-based consulting firm. “Android devices competitive with the iPhone will benefit.”

HTC Corp. (2498) and Motorola Mobility Holdings Inc. (MMI) also make iPhone-class devices that could win over buyers frustrated by Apple’s sales halt, Wolf said.

Scalper Markup

Carolyn Wu, a Beijing-based spokeswoman for Apple, declined to comment on the sales impact of removing iPhones from company stores or say when the devices would return. The new model remains available through carrier China Unicom (762) (Hong Kong) Ltd. and authorized resellers.

Wang Yun and her husband drove more than an hour to the Apple store in Beijing’s Xidan neighborhood, intending to buy an iPhone 4 as a holiday present for themselves. Wang wanted to use the FaceTime video-call feature to chat with friends in the U.S.

“No one told us Apple isn’t selling iPhones anymore, and we drove all the way here,” said Wang, a 34-year-old entrepreneur. “Now what are we supposed to do? It’s a long way to come for nothing.”

Other sources are the dozen hawkers milling around outside, haranguing shoppers with cries of “4S here!” and “Brother, come on, buy one!” Negotiations start at 5,700 yuan ($902) for a 4S handset they say is authentic.

Losing Share

That’s about 14 percent higher than the 4,988-yuan price listed on Apple’s website for the sold-out handset.

The 4S debuted Jan. 13 at four of the five Apple stores in China. Hundreds of people waited outside the Sanlitun district outlet in freezing temperatures, and some started throwing eggs when it was announced that the store wouldn’t open. Police had to restore order.

Apple later announced it was halting phone sales at all stores, saying the move was “for the time being” and intended to “ensure the safety of our customers and employees.”

“Chinese New Year is the most important period for sales promotions,” said Wang Ying, a Beijing-based researcher at Analysys International. “The lack of supply will give competitors an opportunity for sales.”

Cupertino, California-based Apple’s share of China’s smartphone market dropped to 10.4 percent in the third quarter from 13.3 percent the quarter before, while Samsung’s jumped to 19 percent from 15 percent in the same period, according to Stamford, Connecticut-based research company Gartner Inc.

Permanent Loss

Apple sold 5.6 million iPhones in China during the first nine months of last year, making it the No. 4 smartphone vendor in China in the third quarter, according to Gartner. It trails Nokia Oyj (NOK1V), Samsung, and Huawei Technologies Co., Gartner said.

Jason Kim, a Seoul-based spokesman for Samsung, declined to comment.

“Most worrying is the potential loss of good will,” said Teck Zhung Wong, a Beijing-based analyst with IDC China. “There might be real demand permanently lost.”

Apple’s stores in China generate the highest traffic and highest revenue of any of the company’s stores, on average, Chief Financial Officer Peter Oppenheimer said in January 2011.

The maker of iMac computers and the iPad tablet increased its revenue in China to $13 billion in the year ended Sept. 24, from $3 billion a year earlier, Chief Executive Officer Tim Cook said in October. China accounted for 16 percent of Apple’s revenue in the fiscal fourth quarter, making it the company’s biggest national market after the U.S.

‘Scary’ Events

The Sanlitun incident shows the need for Apple to rethink its approach in the China market, said Duncan Clark, Beijing- based chairman of BDA China, which advises technology companies.

“Headlines about scarcity of iPhones and customers camping out, etc., have proven a highly effective marketing approach,” Clark said. “Now events in China have crossed the line from scarcity to just downright scary, both for Apple and the government.”

Sherry Wu, a 19-year-old college student, went to the Xidan neighborhood store with classmate Ada Li to buy the iPhone 4S. After finding the shelves empty, they stood outside and debated what to do.

Wu said she didn’t want to buy from a scalper for fear of getting a fake, so she may ask a friend to bring her a device from Apple’s Hong Kong store. Li then pulled out a Samsung Galaxy handset she’s had for three months and suggested that as an alternative.

“I like the Galaxy,” Li said. “It looks like an Apple but it’s cheaper than the iPhone.”

U.S. website blackout draws praise in China

2012-01-20T10:12:00.000-08:00

Source: By David Pierson, Los Angeles Times

Chinese Internet users are applauding the U.S. tech industry's Web "strike" this week to protest federal anti-piracy bills that would give Uncle Sam greater control of cyberspace.

As websites including Wikipedia shut down and millions of Americans complained to lawmakers about the potential for government censorship, Chinese netizens spoke admiringly of the public rebellion. Such a display in China would be nearly impossible right now, given Beijing's tight grip on citizens' online activities.

"Only an American company could protest the way Wikipedia or Google has to the government," said Zhao Jing, a closely followed blogger in Beijing who uses the pen name Michael Anti. "A Chinese company would never get away with that."

China's communist regime has long exercised control over the Web, forcing Internet firms to censor content that authorities deem offensive or critical of their legitimacy.

Google shut down many functions of its mainland China operation after Chinese hackers in 2009 allegedly stole some of the company's computer code and attempted to penetrate activists' Gmail accounts. (The Chinese government denied involvement.) China has also blocked a number of foreign sites including Twitter and Facebook that could be used to mobilize dissent.

Regulation has gotten even tighter in the wake of the "Arab Spring" uprisings that rocked authoritarian regimes in the Middle East and North Africa. Chinese authorities recently announced new rules requiring users of Twitter-like microblog services to register their accounts under their real names. They've jailed a number of online activists over the last year and have vowed to punish others who spread "harmful information" online, a euphemism for any challenge to the state's authority.

U.S. supporters of the anti-piracy bills in Congress, the Stop Online Piracy Act (SOPA) and the Protect Intellectual Property Act (PIPA), say the legislation is needed to crack down on counterfeiters. Foreign websites that traffic in pirated movies, music and counterfeit goods cost Hollywood and other U.S. content creators billions annually. Cries of Big Brother and censorship from tech opponents are overblown, they said.

But Chinese bloggers appear to be siding with Silicon Valley.

That's because Chinese netizens have found out the hard way that censorship is a slippery slope, said Wen Yunchao, a prominent blogger and outspoken government critic who left mainland China recently for Hong Kong. He said China's so-called Great Firewall, which authorities use to block websites and filter content, was initially billed by Beijing as a way to stop piracy and pornography.

"Now it's being abused and extended to thousands of websites," Wen said.

At least the proposed anti-piracy legislation is being debated openly in the U.S., Wen said. In contrast, China's government Internet watchdogs operate largely in secret. Lack of transparency means Internet companies and users are never quite sure what content is taboo, why or who is calling the shots.

"In China, all the government decisions are done in a dark box," Wen said. "No one knows what's going on. There's never any legal reason cited. If these laws are passed in the U.S., every step of the way it will be more transparent. People can challenge it. There's no comparison when it comes to censorship in China and in the U.S."

Others aren't so sure.

"Now the U.S. government is copying us and starting to build their own firewall," one microblogger wrote of the proposed anti-piracy legislation.

Incidentally, China's 513million Web users have relatively free access to the very sites targeted by PIPA and SOPA. Those include file-sharing sites such as Extratorrent.com and sellers of counterfeit goods such as Taobao.

"The Chinese Great Firewall is not targeting pirated material," said Jason Ng, a popular blogger in Beijing who has 29,000 Twitter followers. "Look at the Chinese Internet space and it's all about pirated movies, TV and porn. Everyone just wants to enjoy and be entertained. If the government cut all that off, they'd have a serious problem on their hands."

Taiwan's Altek could lose US$21m in Kodak bankrupcy

2012-01-20T10:08:00.000-08:00

Source: Want China Times

Taiwan-based Altek, the world's largest contract digital camera manufacturer, has announced it will lose a maximum of NT$624 million (US$21 million) due to the bankruptcy of US photography equipment company Kodak.

Altek expects that its net profit for 2011 will drop to NT$191 million (US$6.4 million) from its original estimates of NT$816 million (US$27.3 million).

Kodak officially announced its bankruptcy Jan. 19. Altek publicized the maximum profit loss in order to ease the minds of investors and said that the company will try by any means possible to collect overdue payments from Kodak.

Altek emphasized that it has a cash flow of NT$7.1 billion (US$237 million), which is enough to sustain a heavy loss. Kodak is no longer Altek's main profit generator, as Altek has been actively trying to expand into the medical and auto electronic equipment industries over the past few years.

Kodak had contributed more than 70% of Altek's revenue up to the first half year of 2009, a figure that now stands at 30%. Altek's current biggest client, Fujifilm, is expected to benefit from Kodak's bankruptcy, according to market observers.

HTC, ZTE among potential buyers of RIM

2012-01-20T10:06:00.000-08:00

Source: china.org.cn

Chinese cell-phone producers HTC and ZTE may join in the race to buy RIM along with Samsung and LG after both showed interest in the Ontario-based Blackberry manufacturer.

A previous report said Samsung was poised to buy RIM. RIM shares soared more than 10 percent over the potential takeover, but later fell after Samsung backed out.

Delays in new product rollouts and a slump in profits have sapped RIM's market confidence, but the company is still worth as much as US$9 billion.

Analysts said RIM is a big lure to HTC and ZTE who don't have their own mobile platform. South Korea-based Samsung, which already sells phones which operate under their own platform, was more interested in acquiring RIM's software.

It is predicted that RIM will announce a final acquisition deal within three months.

2012-01-19T09:48:00.000-08:00

Top Stories...

China Unicom Adds Record 3G Subscribers Undercutting IPhone by 80%

2012-01-19T09:44:00.000-08:00

Source: Bloomberg News

China Unicom Hong Kong Ltd. (762), the nation’s No. 2 carrier, is adding a record number of high-speed wireless subscribers and gaining market share by pushing smartphones that cost 80 percent less than Apple Inc. (AAPL)’s iPhone.

China Unicom started winning customers from market leader China Mobile Ltd. (941) after it switched focus from high-end users of the iPhone to those who can’t afford the device. China Unicom started selling handsets from local manufacturers Huawei Technologies Co. and ZTE Corp. (000063) that cost less than 1,000 yuan ($158), or about half a month’s salary for an urban worker.

The strategy helped make China Unicom the best-performing stock on the benchmark Hang Seng Index last year with a 47 percent increase. It also accelerated the shift to high-speed networks in China, putting the nation on course to surpass the U.S. in smartphone users and enabling Huawei and ZTE to compete against Apple in their home market.

“People aspire to own an iPhone, but they can’t afford it,” said Teck Zhung Wong, a Beijing-based analyst at IDC China. “If a vendor offers a phone that can do most of the things a high-end device can do, there’s no reason people won’t bite.”

IPhones continue to be popular among those who have the money. China Unicom, the only carrier offering the device with a service contract, is down 11 percent this year after customers frustrated by not being able to buy the new iPhone 4S pelted Apple’s main Beijing store with eggs, prompting the handset maker to pull all phones from its store shelves.

Two Months’ Wages

Apple also said its application for a phone to work on China Telecom (728)’s network was moving through the approval process.

China introduced third-generation wireless networks in 2009, six years after the U.S. Adoption of the high-speed service was hampered by handset prices in a nation where monthly urban disposable income was 1,811 yuan per capita through the first nine months of last year, according to the national statistics bureau.

A 16-gigabyte iPhone 4S costs 4,988 yuan at Apple’s online store, or more than two months’ wages.

Last year’s introduction of cheaper models from Huawei and ZTE spurred a 44 percent jump in monthly 3G subscriber sign-ups in June compared with January. The top three carriers -- China Mobile, China Unicom and China Telecom Corp., respectively -- added a record 8.34 million subscribers in September.

Apple Focus

China Unicom initially was on target to miss its forecast for adding 25 million 3G subscribers last year, signing up between 1.21 million and 1.86 million users a month through May, according to government statistics. That’s because the carrier focused on high-end users with the Apple device, said Tucker Grinnan, a Hong Kong-based analyst at HSBC Securities Asia Ltd.

The carrier started selling 1,000-yuan smartphones in May, said Sophia Tso, a Hong Kong-based spokeswoman. By August, it was adding more than 2 million 3G subscribers a month, culminating in a record 3.49 million in December.

China Unicom added 26 million 3G users last year, according to data it released yesterday.

“Low-cost smartphones will enter a period of rapid development as a decisive factor in the popularity of 3G,” Zhou Youmeng, president of sales, said in a statement on the carrier’s website.

China Unicom subscribers can still get a free iPhone 4S by signing a three-year contract for as little as 286 yuan a month.

Taking Share

The number of subscribers to 3G mobile networks in China will almost double to 229 million this year, according to the median estimate of 11 analysts surveyed by Bloomberg News. That compares with 200 million in the U.S., according to the median estimate of five analysts surveyed.

“People are underestimating the growth,” said Jim Tang, an analyst at Shenyin Wanguo Securities Co. in Shanghai who doesn’t cover the U.S. market. “The number is going to be huge.”

As the market expands, more subscribers are going to China Unicom and China Telecom at the expense of China Mobile. China Unicom’s market share will rise to 32 percent this year from 30 percent at the end of 2010, and China Telecom will boost its share to 28 percent from 26 percent, according to the median of four analysts surveyed by Bloomberg News.

China Mobile’s share will drop to 38 percent from 44 percent in 2010, according to the survey. Rainie Lei, a Hong Kong-based spokeswoman for China Mobile, declined to comment on the company’s 3G strategy.

‘Like Hotcakes’

Investors back China Unicom because its 3G customers use an average of about twice as much data as China Mobile’s, said Paul Wuh, an analyst at Samsung Securities Co. in Hong Kong. China Mobile shares are down 3.4 percent in Hong Kong in the past 12 months.

“Unicom’s subscribers are going there with the specific purpose of buying smartphones and using data,” Wuh said. “That’s why people are more excited about Unicom versus China Mobile.”

Between the first and third quarters last year, ZTE’s sales in China almost quintupled and Huawei’s almost tripled, according to data compiled by research company Gartner Inc. Huawei sold 4.47 million handsets there through the first nine months, and ZTE sold 3.03 million.

Cupertino, California-based Apple sold 5.6 million iPhones during the same period as its market share dropped to 10.4 percent in the third quarter from 13.3 percent the quarter before, according to Stamford, Connecticut-based Gartner.

Closely held Huawei passed Apple in smartphone market share with 11 percent. ZTE more than doubled its share to 8.4 percent, cutting Apple’s lead to 2 percentage points from almost 7 in the first quarter, according to Gartner.

Huawei’s best-selling smartphone in the 1,000-yuan category is the C8650, Huawei spokesman Ross Gan said in an e-mail. The Android-based smartphone sold 1 million units within two months of its introduction in July.

ZTE’s top handset is the 1,000-yuan Blade, with 6 million sold, said Rena Qin, a spokeswoman for the Shenzhen-based company. ZTE since has introduced four more smartphones in that price range, she said.

“Low-end smartphones are selling like hotcakes, and there is nothing in the market trends that suggests this is not going to continue,” Wuh said.

Chinese Internet Game Company Will Soon Unveil Smartphone

2012-01-19T09:41:00.000-08:00

Source: China Tech News

Chinese interactive entertainment media company Shanda Interactive Entertainment Limited has announced that it plans to launch its own smartphone product in March or April 2012.

The new smartphone product will reportedly adopt similar sales methods and channels as the company's e-book reader Bambook, and the price of this new product is temporarily set at CNY999. The hardware configuration for Shanda's new smartphone has not been released yet; however, it is rumored that its operating system is developed based on Android.

Shanda's chairman Chen Tianqiao previously made adjustments to the company' businesses in the second half of 2011, emphasizing its new strategic focus on the development of mobile Internet services. Meanwhile, the company's Internet gaming and literature sectors will provide support to the new strategy.

Apple stores sales ban gives boost to rival outlets

2012-01-19T09:39:00.000-08:00

Source: By Shen Jingting (China Daily)

BEIJING - China Unicom (Hong Kong) Ltd, the country's second-largest telecom operator by subscriber numbers, said it has large stocks of Apple Inc's iPhone 4S handsets available for purchase.

That's despite Apple's Chinese stores halting supplies of the device and scalpers charging a markup of as much as 1,000 yuan ($158) for each handset.

"Most Chinese people buy an iPhone device through China Unicom's channels, so it (the sales suspension in Apple's brick and mortar stores) has had a limited impact on the performance of the iPhone 4S in China," said Li Gang, deputy general manager of the parent company, China United Network Communications Group Co Ltd, on Wednesday.

He added that since the iPhone 4S made its Chinese debut on Friday, the market performance has surpassed that of its predecessor, the iPhone 4, but he declined to reveal specific sales numbers.

"China Unicom is the world's second-biggest cooperation partner with Apple, second only to the US-based AT&T," said Li. The carrier, which is the sole Chinese telecom operator selling iPhones on contract, has taken advantage of the massive domestic appetite for Apple products and has enjoyed a boost in terms of the number of third-generation (3G) network users.

China Unicom had more than 40 million subscribers to its 3G services by the end of December, according to Li. The company set a target of adding 25 million 3G users in 2011, and the result "has met our target", Li said.

He said China Unicom hopes to become the No 1 player in China's 3G market in 2012, but did not outline specific measures the company will use to reach that target.

Apple announced on Friday that the iPhone 4S will not be available in stores in Beijing and Shanghai "for the time being", after angry shoppers pelted the company's store in the capital's upmarket Sanlitun area with eggs and quarrels broke out between scalpers and security guards.

But the latest iPhone is still available online, through China Unicom's retail outlets or at official Apple resellers.

Sun Kai, a telecom analyst with the researcher GfK Group, said that, compared with the launch of the iPhone 4 in 2010, the supply volume of the iPhone 4S is much greater. In Beijing's various shopping centers, even in supermarkets such those operated by Wal-mart Stores Inc, shoppers can easily find and purchase an iPhone 4S without pre-ordering.

Cong Xin, an employee at a branch of Sundan Electronic Store in Beijing, which is an authorized Apple retailer and is located close to Apple's Sanlitun store, said that on the launch day his store had more than 300 handsets in stock and about 200 of the devices were sold within a period of four hours.

Sundan charges 5,488 yuan for a 16G iPhone 4S, which is 500 yuan higher than the official retail price.

"Scalpers could suffer if they stockpile the iPhone 4S, because they will soon discover that authorized retailers will offer the handsets at a more competitive price," said Sun.

Wang Jinxin, an iPhone forum master at Baidu Tieba, the biggest online Chinese community provided by the search engine giant Baidu Inc, said scalpers often charge an extra 800 to 1,000 yuan for an iPhone 4S.

2012-01-18T09:38:00.000-08:00

Top Stories...

Web Fills Hole Left by TV in China

2012-01-18T09:35:00.000-08:00

Source: Wall Street Journal By Loretta Chao and Carlos Tejada

BEIJING—Government restrictions are driving young Chinese to turn off their TV sets and turn on their computers. Advertisers and Western studios are right there with them.

China's streaming-video sites once were derided by the global entertainment industry as homes of stolen movies and television shows. But many sites have cracked down on piracy and are offering original programming, as well as licensed Western movies and TV shows such as "Gossip Girl" and "Mad Men."

As a result, ad revenue for Chinese video websites operated by Youku Inc., Tudou Holdings Ltd., Baidu Inc., Sohu.com Ltd. and others surged to 1.48 billion yuan ($235 million) in the third quarter, up 48% from the second quarter, according to market-data firm Analysys International.

Some sites are starting to offer some premium content, charging Chinese consumers for each viewing or on a monthly basis. "People are getting used to paying for content," said Gary Wang, chief executive of Tudou, which has about 12 million paying mobile subscribers.

Tudou, which gets 300 million visitors a month, has paid millions of dollars for exclusive rights to broadcast some Hollywood films, he said, though he didn't offer specifics. In October the company began offering Walt Disney Co.'s "Cars 2" animated movie for 20 yuan, or about $3, a view.

Advertisers such as General Motors Co. are responding by buying banner ads, time before shows and in some cases helping to produce their own Chinese programming. Chinese online-video ad rates accelerated last year, rising 40%—50% in some cities—compared with a 25% rise in overall Internet advertising, according to WPP PLC's GroupM Interaction ad-buying arm.

Youku teamed with GM last year to produce "Miss Puff," an animated online video series about a tech-savvy single woman in Beijing. Her handsome suitor drives GM's Chevrolet Cruze.

"It's a real business, a growing business, and it's only going in one direction," said Dede Nickerson, head of production and strategic development for the China arm of Sony Corp.'s Sony Pictures.

The rush has unleashed bidding wars for rights, leading to predictions of an industry shake-up. Last year LeTV.com, a streaming-video website owned by Leshi Internet Information & Technology Corp., paid about 20 million yuan for the Internet rights to "Legend of Concubine Zhen Huan," a Chinese-produced TV series about a young woman in the court of a Qing dynasty emperor. The amount was a record at the time, said Leshi Vice Chairman Liu Hong, but since has been eclipsed.

"The price of copyrights is going up," Mr. Liu said. "The market is going to become very tough." He said LeTV will prosper because it has an extensive back catalog of programming bought when prices were lower.

Tony Chen, president of the China arm of GroupM Interaction, said he expects some streaming-video sites to close their doors. "It's not a healthy model and not a sustainable model," he said. "I don't know how much more money they can burn."

More than 200 million households in China have cable-television access, according to analysts, but relatively few subscribe to premium services. Industry groups blame Chinese media restrictions, which censor content, limit the number of channels available and cap the amount of foreign programming. China's censors last year began cracking down further, limiting the number of entertainment shows China's satellite broadcasters can offer during prime time and criticizing popular time-travel dramas for their "excessively casual" approach to history.

Also, China's market for video on demand—which allows consumers to order individual programs through their TV sets—is just now gaining viewers. Research firm Media Partners Asia Ltd. estimated that revenue for on-demand services in China will rise to $1 billion in 2020 from $120 million in 2010. Consumer video-on-demand spending in the U.S. already reached $1.8 billion in 2010, according to the Digital Entertainment Group trade organization.

"Despite China's large pay-TV subscriber base, its commercial relevance is limited at present," said Media Partners Executive Director Vivek Couto. "Online video has stepped up and taken that market."

China's video sites can offer more content in part because much of what they air is approved by China's Ministry of Culture, which also oversees DVD releases, and not by broadcast-TV regulators. Mr. Liu, of LeTV, said his firm and others avoid running afoul of Beijing by cutting out programming that questions the government, could be viewed as pornography or touches on forbidden subjects like organized crime.

As competition intensifies, China's video websites have begun producing their own material to differentiate themselves. A popular show made for the Web can cost less than $1 million, according to Tudou. Through ad sales, product placement, merchandise sales and licensing the content for broadcast on television and other channels, the cost can be earned back in a matter of weeks, Tudou said. Illustrating the stakes, Youku and Tudou are battling each other over rights to some content.

Youku, which is listed on the New York Stock Exchange, posted a loss of 47.5 million yuan in the third quarter on revenue of 262.5 million. Tudou, which trades on the Nasdaq Stock Market, earned 52.5 million on revenue of 149.7 million yuan in the same quarter. Programming accounts for much of their costs: Youku spent 26% of its revenue on content, while Tudou spent 28%.

There are efforts afoot to keep Chinese viewers in front of TV sets. At the Consumer Electronics Show in Las Vegas last week, Lenovo Group Ltd. unveiled its Smart TV, which uses Google Inc.'s Android operating system and includes video-on-demand, traditional-TV and Internet applications. The TV set, developed in partnership with broadcaster Shanghai Media Group Inc., is expected to ship in April in China.

China Expands Program Requiring Real-Name Registration Online

2012-01-18T09:31:00.000-08:00

Source: New York Times By Michael Wines

BEIJING — China will expand nationwide a trial program that requires users of the country’s wildly popular microblog services to disclose their identities to the government in order to post comments online, the government’s top Internet regulator said on Wednesday.

The official, Wang Chen, said at a news conference that registration trials in five major eastern Chinese cities would continue until wrinkles were worked out. But he said that eventually all 250 million users of microblogs, called weibos here, would have to register, beginning first with new users.

Mr. Wang indicated that under the program, users could continue to use nicknames online, even though they would still be required to register their true identities.

Mr. Wang leads the State Council Information Office, which regulates the Internet and the government’s domestic public-relations machine. He also is a deputy director of the Communist Party’s propaganda department and, in particular, is in charge of China’s lavishly financed recent efforts to burnish its image worldwide.

The government has said that it is studying real-name registration of microbloggers to limit the spread of malicious rumors, pornography, scams and other unhealthy practices on microblogs, which have become a major source of news for many Chinese.

Free-speech advocates generally condemn the move, saying that the microblogs’ freewheeling debate and frequent criticism of official misconduct will be neutered if the government knows the identity of everyone who posts a comment. Real-name use also would allow security officers to target microblog users who consistently post comments about sensitive issues, even if their individual remarks do not attract large numbers of readers.

China counted 513 million people online in 2011, a sharp increase from 2010, but microblogs have grown even more spectacularly, quadrupling the number of users in the last year. They revealed their power to drive public opinion last July, after a high-speed rail crash in Zhejiang Province prompted tens of millions of online comments, many condemning the government’s stewardship of the rail system and its response to the accident.

The government soon stepped up its efforts to monitor and censor online dialogue on sensitive topics, with senior Communist Party officials visiting major Internet companies to underscore their concern. The trial requirement of real-name registration was announced last month.

Mr. Wang said on Wednesday that the government broadly supports citizens’ use of microblogs, noting that an average day sees 150 million new comments posted online. “Weibos can indeed reflect people’s opinion and spread positive voices and enrich information services,” he said. “But they have also made it easy for some irrational voices and negative opinions and harmful information to spread quickly.”

Real-name registration will have a chilling effect on some kinds of online comment, Hu Yong, an associate professor at Peking University’s school of journalism and communications, said in a telephone interview on Wednesday. But it remains to be seen how many users would be dissuaded from speaking out on controversial issues, Mr. Hu added.

“Certainly some people will not dare to speak out about certain issues,” he said. “But a lot of people already are using their real names, even in discussing current affairs. And the user base of weibos is so huge that if something happens to highly concern their own interests, I think you’ll still hear a loud uproar.”

At Wednesday’s news conference, Mr. Wang also suggested that the government and the Communist Party would continue to expand and improve domestic and global public-relations machines, starting with training for news spokespersons who are increasingly deployed in government offices.

Some press officers are “putting the government on the back foot in dealing with emergency events,” he said, because they have not yet learned how to respond quickly and accurately to requests for information. He said public-relations officials would be trained in “political thought” and “the spirit of speaking truth,” adding: “Speaking honestly is the most valuable quality of news spokespersons. Skills are necessary, but that comes second.”

On the foreign front, Mr. Wang said, “We will spread the voice of China to the world with an even more open attitude and more efficient methods.”

The goal, he said, is to educate foreigners to China’s domestic and foreign policies, values and culture “so that we can show off a national image of being civilized, democratic, open and progressive.”

China Objects to U.S. 'Notorious Markets' Designation for Taobao

2012-01-18T09:28:00.000-08:00

Source: Wall Street Journal By Owen Fletcher

BEIJING—China's Commerce Ministry expressed opposition to the U.S. Trade Representative's recent inclusion of Alibaba Group Holding Ltd.'s Taobao e-commerce operation on a list of "notorious markets" for piracy. The ministry also called for the U.S. to be more objective in judging China's record on intellectual-property rights.

The remarks came as Beijing has boosted its efforts to combat rampant intellectual-property violations and counterfeiting, problems that U.S. companies and government officials have long complained about in China.

"We express strong concern and dissatisfaction" toward the trade representative's inclusion of Taobao, ministry spokesman Shen Danyang said at a news briefing on Wednesday. "China believes the U.S. should thoroughly and objectively reflect the efforts and the progress made by China's government and companies on intellectual-property-rights protection, make fair assessments and avoid creating unnecessary negative effects for Chinese companies," he said.

In its latest notorious-markets review, the trade representative last month said Taobao carries listings of pirated and counterfeit goods despite "significant efforts" by the company to address the issue, and after the trade representative last year praised Taobao for an initiative to provide leads to Chinese authorities on infringing activities.

The trade representative also removed Chinese search-engine operator Baidu Inc. from its list and praised the company for resolving its yearslong battle with the music industry, through an agreement to post links to licensed music tracks from major record labels.

China's Commerce Ministry has objected to the trade representative's list before. Li Chenggang, head of the ministry's Department of Treaty and Law, early last year expressed concern that the list provided no detailed evidence of infringements, according to the state-run Xinhua news agency.

Alibaba operates consumer-bartering website Taobao Marketplace and retail website Taobao Mall, where businesses ranging from mom-and-pop operators to well-known retail like Gap Inc. sell goods. Alibaba has worked to prevent sales of counterfeit goods on both sites, but some companies have hesitated to sell through Taobao Mall because of concerns about sales of counterfeit products on Taobao Marketplace.

Taobao Mall this month changed its Chinese name to Tian Mao, a move meant to help consumers better distinguish the website as one with goods sold by businesses rather than consumers. Taobao Mall said it logged more than 100 billion yuan ($15.8 billion) in transactions last year, up more than three times from a year earlier.

Qihoo 360's Safebox Software Will Integrate With Uuu9.com

2012-01-18T09:25:00.001-08:00

Source: China Tech News

Chinese Internet security software provider Qihoo 360 announced that its 360Safebox software will be integrated into Uuu9.com, a Chinese portal for gaming information.

According to Qihoo 360, the new company established after the integration will be positioned as an open gaming platform that uses 360Safebox for Internet security protection. Liu Liang, chief executive officer of Uuu9.com, will become the chief executive officer of the new company.

Liu said that the latest and most important task for the newly established company is to transform from a gaming content manufacturer to a gaming content integrator. In the future, the company will focus on cooperation with all gaming information portals in China to create a new game-oriented open platform by integrating a large number of users and information.

Zhou Hongwei, chairman of Qihoo 360, said that by integrating 360Safebox with the gaming content resources of Uuu9.com, Qihoo 360 hopes to provide users with secured services while helping game manufacturers accurately deliver their product information to targeted users.

At present, there are about 80 Web games operating on the game platform of Qihoo 360. Revenue from these games reportedly accounted for nearly 30% of the total revenue of the company, according to the latest financial report of Qihoo 360.

360Safebox is ID protection software launched by Qihoo 360. It provides functions to protect the security of online games, instant messaging tools, and Internet banking accounts. In addition, it can help accelerate the running speed of online games, offer testing codes of games, and game supporting tools. The software currently has 87 million users in China.

Uuu9.com was founded in 2004 and it is one of the many gaming information portals in China. It offers more than 20 channels, covering gaming news, special zones, videos, forum, download services, music, gaming assistants, and e-sports.

2012-01-17T09:43:00.000-08:00

Top Stories...

Qunar Considers U.S. IPO as China Travel Demand Fuels Growth

2012-01-17T09:41:00.000-08:00

Source: Bloomberg News

Qunar.com Inc., a Chinese travel search site partly owned by Baidu Inc. (BIDU), is considering an initial public offering in the U.S. as it expects soaring demand for travel services to double revenue this year.

Qunar broke even in 2010 and more than doubled sales in 2011 to “a few hundred million” yuan, Chief Executive Officer CC Zhuang said in an interview. He declined to give a timeframe or other target terms for a share sale.

The website gets most of its revenue from cost-per-click travel ads and may raise money from U.S. investors after selling a $306 million majority stake to Baidu (BIDU), the nation’s biggest search engine, last June. China’s tourism market may overtake Japan’s as the world’s largest after the U.S. by 2013, Boston Consulting Group Inc. said in March.

“We are a unique platform that connects the traditional IT system of airlines and hotels with massive information searches on the Internet,” Zhuang said Jan. 12 at Qunar’s Beijing headquarters.

Zhuang is attracting users by offering flight and hotel booking information that isn’t limited to specific vendors and allows searchers to make reservations directly with airlines, hotels and services that match their needs.

China travel industry revenue is expected to increase 14 percent annually to 5.5 trillion yuan ($871 billion) in 2020 from 1.5 trillion yuan in 2010, according to Boston Consulting Group.

“Moving forward, the whole nation will be more and more comfortable using online travel,” Zhuang said.

Tencent, Ctrip

Tencent Holdings Ltd. (700), China’s biggest Internet company, on May 17 said it bought a 16 percent stake in Qunar’s competitor ELong Inc. for $84.4 million to expand in online travel. Chinese rival Ctrip.com International Ltd. (CTRP) listed on the Nasdaq Composite Index (CCMP) in December 2003.

Ctrip.com has declined 42 percent in the past 12 months in Nasdaq trading, compared with a 1.6 percent drop of the Nasdaq Composite Index, according to data compiled by Bloomberg.

Qunar will consider an IPO “as soon as the market becomes stabilized,” said Zhuang, who worked for the World Bank in Washington from 2001 to 2005.

Qunar, which means “Where do you want to go?” in Chinese, was founded in 2005. It provides information on flight tickets, hotels, packages, and visas, among other travel services, according to its website. Its search functions list options for travelers, who are then directed to the websites of airlines, hotels and other travel services, to make their purchase.

Catching the West

Travel booked on the Internet accounts for about 7 percent of China’s tourism market and that ratio is expected to surge to 30 percent in the next five years, similar to current levels in the West, Zhuang said.

Qunar hasn’t used the cash from Baidu’s investment so far, according to Zhuang. He wants the company to have cash on hand to tap opportunities, especially growth in mobile device applications.

“In the next few years, mobile travel is going to be big,” he said. “Mobile travel may have new game rules, may have new ideas -- something we don’t even imagine today, but they will appear one night somewhere in the world.”

Amazon expands business in SW China

2012-01-17T09:37:00.000-08:00

Source: Xinhua

NANNING - Amazon.com, the world's largest online retailer, will set up a major distribution center in the southwestern city of Nanning, local authorities said Tuesday.

The Seattle-based company Monday signed a deal with the Economic and Technological Development Zone in Nanning to build its distribution center in the city, capital of Guangxi Zhuang autonomous region, said a statement released by the zone's management office.

The center, with an investment of 600 million yuan ($95 million), will generate an annual output worth at least 200 million yuan after it starts operation, said the statement, without elaborating on the timetable.

The center will cover an area of 332 mu (about 22 hectares), on which a 50,000-square-meter E-commerce center will be built, in the Beibu Gulf Technopark, said the statement.

Once operational, the facility is expected to provide over 1,000 jobs, it said.

Amazon said Nanning had a favorable investment environment, as the city is the capital of Guangxi which borders Vietnam and is China's gateway to doing business with the ASEAN, said Zhou Honglin, employee of Amazon's operation center in Xiamen, a major city on the country's southeastern coast.

2012-01-16T10:25:00.000-08:00

Top Stories...

Number of Web users in China hits 513 million

2012-01-16T10:21:00.000-08:00

Source: Los Angeles Times

The number of Web users in China soared past 500 million last year, a tech-industry group said Monday, capping a period of explosive growth that has elevated Chinese Internet companies and challenged social and political discourse in the communist-controlled state.

The government-run China Internet Network Information Center said Monday that the number of Web users in China grew 12% in December, to 513 million, compared with the same period in 2010.

Chinese Internet giants such as search engine Baidu Inc., news portal Sina Corp. and gaming and messaging service provider Tencent Holdings added millions of users, raising the profile of the increasingly lucrative sector.

But 2011 was also a year that saw the increasing social might of Chinese micro-blogs, which became engines of public opinion that often challenged the authority of state-sanctioned news.

The number of micro-blog users quadrupled last year to just under 250 million, the China Internet Network Information Center said in its recent report.

Known in China as weibo, micro-blogs act much like Twitter, allowing users to post short messages with links that can then be read by subscribers.

The speed and scope in which the services operate create difficulties for government censors, who have more success blocking access to foreign websites such as Facebook, YouTube and Twitter using filters, better known as the Great Firewall of China.

Micro-blogs were instrumental last year in exposing government mishandling of a deadly high-speed rail collision in the eastern city of Wenzhou, protests concerning a chemical plant in the northern city of Dalian and corruption in the southern village of Wukan.

A recent decision by Beijing authorities to report the extent of the city's air pollution with greater accuracy is largely credited to an online campaign started from the micro-blog account of well-known property developer Pan Shiyi,

"Today we can say without hesitation that an independent and richly participatory civil society is emerging on China's Internet," wrote Hu Yong, a journalist and commentator in a recent article translated by the China Media Project at the University of Hong Kong.

"The Internet cannot usher in dramatic change to political life in China, but it can promote the creation of social capital on the basis of citizen rights and duties, giving rise to and strengthening social forces independent of the Chinese state," Hu continued.

The rising popularity and influence of micro-blogs has worried the central government, a fear exacerbated by the role of social media in the so-called Arab Spring uprisings. Chinese authorities have intensified efforts to quash domestic opposition in the last year, jailing and detaining a number of activists.

Damien Ma, an analyst at the Eurasia Group, wrote in a post on Atlantic magazine's website earlier this month that China's leaders regard social media as "western-invented weapons of mass dissemination as potentially powerful as nuclear bombs."

Since the Wenzhou train crash in July, authorities have increased pressure on micro-blog providers (namely Sina and Tencent) to crack down on "rumors," a euphemism for government criticism.

In October, the Communist Party's Central Committee vowed to strengthen control of the Internet, threatening to punish those responsible for spreading "harmful information."

Last month, cities announced new rules requiring micro-blog users to register their accounts with their real names, making it more risky for individuals to challenge authorities.

How much China's leaders are willing to rein in the Web remains to be seen -– a question investors will have to grapple with in a market otherwise filled with potential.

The Internet sector is the only major industry in China still dominated by private companies. But given the attention to reestablishing government order, 2012 may be defined by how much the state ultimately encroaches online.

One sign is regulators' approval last week for an online unit of the Communist Party's mouthpiece, the People’s Daily, to offer shares in Shanghai. The newspaper plans to raise $83 million to challenge established Web portals such as Sina and Sohu.

ChinaSoft to partner up with Huawei

2012-01-16T10:17:00.001-08:00

Source: Want China Times

China's information-technology service provider, ChinaSoft International, will to form a software-outsourcing company with China's leading telecom provider Huawei, according to the Guangzhou-based 21st Century Business Herald.

ChinaSoft has announced they will have a 60% stake in the joint venture, while the remaining 40% will belong to Huawei.

Chen Yuhong, chief executive officer of ChinaSoft, said his company needs to partner with a large company in order to become an industry leader.

"With an annual revenue of more than US$30 billion, Huawei has grown quickly in recent years, and its research-and-development approach will be valuable for our growth. We will tap into the overseas market with the help of Huawei," Chen said.

Huawei is set to receive 40% of the profits from the new joint venture, in addition to entering the software-outsourcing market, said Cao Kaibin, a software expert and the editor-in-chief of soft6.com.

A market analyst said ChinaSoft's collaboration with Huawei could cost it business from ZTE, Ericsson and Cisco Systems, which are Huawei's competitors in the market.

The analyst said Huawei had approached Vance Info and SoftStone about possible partnerships, but was turned away by the two software-outsourcing companies on the grounds that it could deter their other customers, who are competitors of Huawei.

The new venture could dampen the development of the software outsourcing industry in China by undermining its independence and downgrading it to the bottom of the industry chain, said Cao Kaibin.

Cloud computing frenzy sweeps China, but to what end?

2012-01-16T10:15:00.000-08:00

Source: Want China Times

Cloud computing has triggered an investment frenzy in many cities in China, but observers are uncertain about the eventual result of the push to put money into the young technology.

At issue is how to transform the information resources of cloud computing centers into useful applications to bring actual benefit to the public and firms. Li Youping of the Chinese Academy of Engineering said that the investment frenzy is premature, as a mature business model for cloud computing has yet to be established.

Guangzhou plans to invest 1.8 billion yuan (US$284 million) in a cloud computing center. The city government has also publicized an action plan for the development of a cloud computing industry, which will apply the technology to governance, medicine, education and urban management.

In October 2010, the Ministry of Industry and Information Technology designated Beijing, Shanghai, Shenzhen, Hangzhou and Wuxi to carry out trials on innovation and development of cloud services. Other municipalities have subsequently found themselves on the bandwagon.

CCID Consulting predicts that the market scale of China's cloud computing market will reach 60.6 billion yuan (US$9.58 billion) this year. By the end of the 12th five-year economic plan (2011-2015), China's cloud-computing market will be between 750 billion and 1 trillion yuan (US$118.6 billion and US$158 billion), the consultant said.

An industry insider points out that many cities only focus on the construction of cloud computing centers, without actual plans to utilize the efficiency the technology provides. Tian Feng, supervisor of telecom equipment provider ZTE, notes that the equipment utilization rate of cloud computing centers in Beijing, Shenzhen and Chongqing reaches just 25% at most.

The cloud computing investment frenzy, however, has caused excitement among IT hardware suppliers. An insider points out that the global sales of servers by Intel and AMD top 2.1 million units a year, including 600,000 units in China. Chongqing alone, meanwhile, is planning a cloud computing center to be furnished with 300,000 servers.

Baidu to Build Southern China Office in International Push

2012-01-16T10:12:00.001-08:00

Source: Bloomberg News

Jan. 16 (Bloomberg) -- Baidu Inc., China’s biggest Internet company by market value, said it will set up a new center for international operations in southern China, stepping up efforts to add overseas users and revenue.

International expansion is an “important way” for Baidu to drive future growth, Chief Executive Officer Robin Li said today in Shenzhen, where the company is building a 220,000 square-meter complex to be opened in 2015. The facility will also accommodate the mobile Internet business, he said.

Baidu started services in Arabic and Thai last year as the Beijing-based company boosted plans to expand internationally after overcoming competition from Google Inc. to dominate in China’s search-engine market. Chinese Internet rivals Tencent Holdings Ltd. and Alibaba.com Ltd. have also acquired online assets overseas.

The new Shenzhen office complex will be able to house 10,000 employees, Baidu spokesman Kaiser Kuo said by phone today. Baidu at present has about 15,000 employees, he said.

In May, Baidu said it’s working on services in 12 foreign languages. The Chinese company, which started a Japanese service in 2008, rolled out products in Arabic and Thai in September.

Robin Li’s wealth increased to $9.2 billion from $7.2 billion a year earlier, ranking him behind only Sany Heavy Industry Co. Chairman Liang Wengen among China’s richest, according to Forbes Asia.

The9 Will Operate Sony Ericsson's PlayNow App Store In China

2012-01-16T10:10:00.000-08:00

Source: China Tech News

Chinese online game developer and operator The9 has announced with smartphone maker Sony Ericsson that starting this month The9 will be the exclusive operator and technical supporter for Sony Ericsson's PlayNow application store in China.

PlayNow application store provides mobile application programs as well as entertainment resources like ringtones and themes for users of Sony Ericsson's Xperia smartphones. With the embedded PlayNow client in Xperia smartphones, users will be able to browse, purchase, and download apps, games and entertainment content.

According to the agreement signed by the two parties, The9 will reportedly support the operation of Sony Ericsson's PlayNow application store in China, offering technical and operation support to the store. Meanwhile, the Chinese company will help Sony Ericsson with application tests and online and offline marketing. In addition, The9 will be committed to introducing high-quality Java and Android games and applications into the application store.

Shen Guoding, vice president for The9 and general manager for the wireless Internet business department, told local media that The9 will not only transfer its experience in mobile Internet operation into the PlayNow application store, but also will make efforts to establish it as a fair and transparent cooperation platform, creating opportunities for all developers.

Financial details of the deal were not revealed.

Lenovo smartphone will have Intel inside

2012-01-16T10:07:00.000-08:00

Source: By Tuo Yannan (China Daily)

LAS VEGAS - The first smartphone equipped with a chip made by the technology company Intel Corp will go on sale in China in the second quarter of the year.

Lenovo Group Ltd - the largest PC maker in China and second-largest in the world by sales - made that announcement on Wednesday at the 2012 International Consumer Electronics Show in Las Vegas.

China is the largest market for smartphones and is expected to see more than 100 million smartphone shipments this year, according to the US-based research company IHS iSuppli Corp. Lenovo's K800 smartphone is to come equipped with an Intel chip, marking the first time Intel has provided one of its devices for such a product.

For years, the Silicon Valley giant, whose chips are mainly used in personal computers, has struggled to move into the smartphone business.

Almost all smartphones and tablet PCs use chips from Qualcomm Inc, Broadcom Corp and similar companies. The designs for those chips often come from the British technology company ARM Holdings PLC, which is known for making products that have low energy consumption, helping batteries in Internet mobile devices last longer.

"The best of Intel computing is coming to smartphones," said Paul Otellini, Intel president and CEO. "Our efforts with Lenovo and Motorola Mobility will help to establish Intel processors in smartphones and provide a solid foundation from which to build in 2012 and into the future."

According to iSuppli, the majority of smartphone shipments in China in the past few years were for the country's domestic market. But that is expected to change; experts believe about half of all smartphone shipments in 2015 will be exports.

"This new partnership means Lenovo, a Chinese company, is trying to attract customers by combining its strength in making PCs with the production of smartphones," said Wang Jiping, a senior analyst with the research company IDC China.

Liu Jun, Lenovo senior vice-president and president of the company's Mobile Internet and Digital Home Business Group, joined Otellini at the consumer electronics show to introduce the Lenovo K800 smartphone, which contains Intel technology and runs on Google Inc's Android operating system.

Liu said the smartphone will be available in China in the second quarter of the year and will run on a network operated by China Unicom Ltd, the second-largest telecommunications carrier in China.

"We sold 6.5 million phones this past quarter, half of which were smartphones," said Yang Yuanqing, CEO and president of Lenovo.

This year, Chinese makers of mobile handsets are expected to nearly double the number of products they ship, bringing it to more than 100 million.

Beyond Lenovo, Motorola Mobility Holdings Inc plans in the second half of the year to release smartphones that also feature Intel Atom processors and use the Android operating system.

Intel said its partnerships with makers of mobile Internet devices will also concern tablet PC products and that its smartphones will be sold in more countries and regions.

Newspaper web portal IPO under scrutiny

2012-01-16T10:02:00.000-08:00

Source: China Daily via china.org.cn

A proposed initial public offering by the People's Daily's online news portal came under the scrutiny of the China Securities Regulatory Commission on Friday.

If the offering is approved, the portal, People.cn Co, is likely to become the first publicly listed State-level news medium.

People.cn plans to raise about 527 million yuan ($84 million) on the Shanghai Stock Exchange, according to a preliminary prospectus posted on the regulatory commission's website.

The People's Daily, one of the country's biggest newspapers by circulation, is the largest shareholder in People.cn. It has 66.01 percent of the portal's equity, according to the prospectus.

In the event of a successful IPO, People.cn plans to invest more in its Internet services, improve its infrastructure and strengthen its news reporting team, Beijing News reported on Friday.

The company is faced with "serious challenges" from sina.com.cn, sohu.com, qq.com and other commercial news websites, the prospectus said.

"The increasing awareness of brands and abundant capital resources have enabled commercial news websites to grow very quickly," it said. "And they could obtain more news content by working with other news media."

People.com.cn, People.cn's chief website, was placed at No 64 in a ranking of China's most-popular websites on Friday, according to data from Chinarank.org.cn, which ranks other websites. Its main competitor, the commercial website sina.com.cn, ranked No 4 on the list and sohu.com came in at No 6.

People.cn is not the only online State-owned media portal that plans to pursue an IPO. As many as 10 similar websites plan to be listed on the Shanghai Stock Exchange, China National Radio reported, citing industry insiders.

They include Xinhua News Agency's xinhuanet.com, and China Central Television's China Network Television (CNTV).

"We do plan to list CNTV, but a timetable for doing that has yet to be announced," said Wang Wenbin, general manager of CNTV. He also said it would be acceptable if the website were not listed this year.

"Central media are expecting to lift their competitive strength through IPOs," said an executive from Xinhuanet.com, the website for the State-level Xinhua news wire, who declined to be named. "The government's decision to strengthen the country's 'soft power' will encourage State-level media to be listed."

China plans to further establish its "soft power" in the next couple of years, according to the country's 12th Five-Year Plan (2011-15). The government has promised to give more support to education, culture and the media.

"They (State-owned media) need to tap capital markets to compete," Vivek Couto, executive-director of a Singapore-based consultant company, Media Partners Asia Ltd, told Bloomberg News on Tuesday.

2012-01-13T09:52:00.000-08:00

Top Stories...

Fracas Curtails China iPhone Sales

2012-01-13T09:50:00.000-08:00

Source: Wall Street Journal By Owen Fletcher

BEIJING—Apple Inc. said it would temporarily stop selling the iPhone in its five retail stores in China after unruly customers in Beijing led police to seal off a store there and after the newest version of the phone sold out elsewhere.

An Apple spokeswoman in Beijing said on Friday that the iPhone 4S, which made its debut on Friday in the country, won't be offered at its retail stores in Beijing and Shanghai "for the time being." She said, however, it would still be available online, through local partner China Unicom (Hong Kong) Ltd. and through resellers. She cited the disturbance at the Sanlitun store in Beijing, where hundreds of customers waited overnight and where frustration boiled over Friday morning.

The company made the move "to ensure the safety of our customers and employees," she said. Apple has two Apple Stores in Beijing and three in Shanghai, though its products are widely available through other companies.

The move came after the debut of the iPhone 4S at the Sanlitun swank shopping district went awry on Friday morning.

Apple fans waiting overnight in the freezing cold turned angry and at least one pelted the store façade with eggs when it failed to open Friday morning as expected. The store never opened, and by midmorning authorities wielding megaphones roped off the store and told the crowd of hundreds to disperse to break up the tense scene.

The state-run Xinhua news agency said many who were waiting in line were scalpers, though those reports couldn't be immediately confirmed.

The world's No. 2 economy has become a major source of growth for the Cupertino, Calif., maker of iPhones and iPads. Apple's sales in China and Hong Kong surged nearly fivefold in the fiscal year ended Sept. 24 to $12.47 billion. The U.S. and China were the only countries that accounted for more than 10% of the company's net sales in 2011.

Apple's logo is a familiar presence in the well-to-do areas of major cities like Beijing and Shanghai. The biography of late co-founder Steve Jobs is a popular read, and ads for the book make his photograph a common sight on streets in Beijing.

But the enthusiasm has resulted in frustration at times. In May, in the gleaming Sanlitun Apple store, shoppers lining up for sales of new, white iPhones scuffled with store employees, leading store managers to lock the doors. One of the plate-glass windows was smashed in the process.

Apple fans hoping to buy the new iPhone 4S began lining up outside the Sanlitun store on Thursday. Temperatures dropped overnight to well below freezing, and by Friday morning the crowd was growing impatient.

One immediate problem: It wasn't clear when store doors would open, according to those in line, despite signs telling shoppers where to line up. Many were expecting the store to open at 7 a.m. local time. It didn't.

At about 7:40 a.m., somebody threw a few eggs at the store's glass exterior.

About an hour later, men with megaphones were declaring outside the store that sales wouldn't start and people should leave.

Authorities soon began forcing people away from the store and blocking the cameras of reporters who had shown up to cover the event.

By 11 a.m., the store still hadn't opened, and several dozen police had cordoned off the store as well as much of the public square. Another 50 or so people remained.

"It's so unfair. What they [Apple] said was unreliable. I waited here a whole night and was still forced away," said Zhang Tao, a 21-year-old student outside the police cordon. "I think it's Apple's fault. They weren't opening the doors. If they'd opened the doors, then do you think someone still would've thrown those eggs?"

But he said he would still buy the iPhone 4S and planned to keep waiting for the store to open. "I like the phone, so there's no other way," Mr. Zhang said.

Chinese brands promote new products at CES in Las Vegas

2012-01-13T09:37:00.000-08:00

The Lenovo K800, the first smartphone built using Intel's "Medfield" Atom chip, is displayed at the Consumer Electronics Show (CES) in Las Vegas, the United States, on Jan. 11, 2012. Chinese electronic-related companies attracted people's attention this year with all their newest products and innovated technologies.

People visit the TCL booth during the Consumer Electronics Show (CES) in Las Vegas, the United States, on Jan. 11, 2012. Chinese electronic-related companies attracted people's attention this year with all their newest products and innovated technologies.

Yang Chun, a staff of Lenovo, displays an Idea Pad Yoga during the Consumer Electronics Show (CES) in Las Vegas, the United States, on Jan. 11, 2012.

The Haier booth is seen at the Consumer Electronics Show (CES) in Las Vegas, the United States, on Jan. 11, 2012. (Xinhua/Yang Lei)

2012-01-12T10:07:00.000-08:00

Top Stories...

Google Softens Tone on China

2012-01-12T10:04:00.000-08:00

Source: Wall Street Journal By Amir Efrati and Loretta Chao

Google Inc., which pulled its Web-search engine out of mainland China two years ago after a confrontation with Chinese authorities over censorship, has renewed its push to expand there, in an acknowledgment that it can't afford to miss out on the world's biggest Internet market.

The search giant is hiring more engineers, salespeople and product managers in China and working to introduce new services for Chinese consumers, according to Daniel Alegre, Google's top executive in Asia.

In particular, Google is aiming to capitalize on its fast-growing Android operating system for mobile devices, online-advertising and product-search services to grow in China, Mr. Alegre said in an interview.

One goal, he said, is to introduce its Android Market, which offers thousands of mobile applications to users of Android-powered smartphones and tablets but isn't available in China.

The company also is trying to win over Chinese consumers with services that don't require official censorship, such as Shihui, which launched in September to help people search among Chinese sites offering discounts at local stores. Google is also working to beef up its product-search service to help consumers find goods from online retailers.

Chinese officials didn't respond to a request for comment.

Google is revving up its new push near the two-year anniversary of its declaration that it would stop censoring its Internet-search results in China, as required by local law, and that it was prepared to leave the country altogether.

The Jan. 12, 2010, announcement represented a stark departure from the policy of compromising with Chinese authorities that Google and other Western technology companies had long followed. And it was perceived by many Chinese as marking Google's total withdrawal from the country.

The censorship fracas began after Google disclosed it had traced a 2009 cyberattack back to Chinese hackers, who allegedly stole some of the company's proprietary computer code and attempted to spy on Chinese activists' Gmail accounts. Chinese officials denied any connection to the incident.

Google subsequently stopped offering Web search on its main Chinese site, Google.cn, and instead directed people to a search site based in Hong Kong, which isn't subject to the same government censorship requirements.

But for users in mainland China, the Hong Kong search site, along with other Google services such as Gmail, are plagued with frequent service disruptions because of the government's Web-filtering system.

Company co-founder Sergey Brin said at the time of the clash that he pushed for the company to take an anti-censorship stance. He prevailed over then-Chief Executive Eric Schmidt and others, who initially felt Google should stay the course in China, people familiar with those discussions have said.

In an interview with The Wall Street Journal back then, Mr. Brin said China's efforts to censor the Web and suppress dissidents reminded him of the "totalitarianism" of the Soviet Union, where he was born. "In some aspects of their policy, particularly with respect to censorship," he added, "I see the same earmarks of totalitarianism, and I find that personally quite troubling."

While Google, which opened its first China office in 2005, shut down many functions there following its decision to stop censoring search results, it says it never abandoned the country. It still has more than 500 employees there, including more than 300 engineers. That's down from about 700 employees in 2009, according to a former Google executive in China.

Now, with Android's growth in China and with more Chinese companies looking to advertise online, Google's decision to reverse course and invest more in China is a "pragmatic" one, said Mr. Alegre.

For Mr. Brin and fellow co-founder and current CEO Larry Page, "there is a very large business opportunity in China, and they recognize it," he said.

Overall, China had more than 500 million Internet users as of September, up from 485 million three months earlier, according to government statistics. By contrast, the U.S. had 220 million Internet users in November, up from 212 million a year earlier, according to research firm comScore Inc.

Google's move comes at a pivotal time for China's Internet industry. Despite the prevalence of government censorship, the Web is increasingly an outlet for Chinese citizens to share information and express discontent, including about the government, amid heightened tensions ahead of the country's once-a-decade leadership transition this year.

Twitter-like microblogging services such as Sina Corp.'s Weibo have become popular platforms for sharing opinions and information about controversial topics, even as Google has sat on the sidelines.

China currently accounts for no more than 2% of Google's total revenue, which is expected to reach more than $40 billion for 2011, according to a Citigroup Inc. analysis.

Google's share of China's Web-search market fell to 17.2% in the third quarter of 2011 from 36% in the fourth quarter of 2009, largely to the benefit of rival Baidu Inc., according to Analysys International, a Beijing-based research firm.

Still, the number of Google Web searches by mainland-Chinese Internet users has risen over the past two years, said Mr. Alegre, who is based in Tokyo and often visits Beijing and Shanghai. Such a gain would theoretically help boost Google's search-ad business, though a company spokesman declined to comment on the matter.

Separately, the company has seen growth in its services that help Chinese advertisers target Internet users—both inside and outside of China—on thousands of non-Google websites and mobile apps.

Overall, Google's revenue in China rose in last year, compared with 2010, Mr. Alegre said, though he declined to go into specifics. "If you look at what has transpired, we're actually very happy with the way our business is progressing" in China, he said.

Google's share of the Chinese online-ad market stabilized at around 7% during the first half of 2011, according to Analysys, down from 10.9% in the second quarter of 2010.

"People tend to think Google quit China, but China didn't quit Google," said Duncan Clark, chairman of consulting firm BDA China Ltd, referring to Google's advertising services for Chinese companies who want reach people around the globe.

He added that some Chinese Web users "still put up with the frustration of using Google," including Google Maps and Gmail, despite the disruptions.

If it completes its $12.5 billion acquisition of Motorola Mobility Holdings Inc., as expected, Google will own one of China's largest sellers of mobile devices.

Google also wants to make money from Android, which powers nearly 60% of smartphones in China, according to Analysys. The phones there don't come with official Google services like the company's search engine or the Android Market app store. Mr. Alegre said Google continues to discuss carrying Android Market "with various players in the market"—likely Chinese wireless providers—but that he had nothing to announce.

Introducing Android Market could pose some censorship issues for Google. Non-Google app stores that currently run on China-based Android devices filter out apps that violate Chinese regulations.

Google's relations with some arms of the Chinese government have remained rocky. In effect, it pointed the finger at the government in June 2011, when it announced that China-based parties had been trying to gain access to the Gmail accounts of senior U.S. officials, human-rights activists and others.

Such allegations are "unacceptable," a Chinese Foreign Ministry spokesman said at the time. Several months later, however, China renewed Google's license to operate a website in the country. China has accused Google and the U.S. of using Internet freedom issues to meddle in its internal affairs.

A person familiar with the matter has said Google's systems have been repeatedly targeted by China-based hackers since the successful attack in 2009, though this doesn't necessarily imply government involvement, experts say. Mr. Alegre declined to comment.

Many former Google China employees lament Google's diminished status in the country. "What we hoped to accomplish with Google China is now being realized by Weibo," proving that "engagement is the right approach," said former Google China chief Kai-Fu Lee, who left the company in 2009.

Alibaba to spend more on B2C site

2012-01-12T09:47:00.000-08:00

Source: By Gao Yuan (China Daily)

BEIJING - The Chinese e-commerce giant Alibaba Group pledged on Wednesday to invest more this year in Tmall.com, a website that allows businesses to sell products directly to customers.

The company hopes to ensure Tmall has the largest market share among all so-called business-to-customer websites.

"This investment in Tmall.com will definitely be higher than the amount this past year," said Wang Shuai, chief marketing officer of Alibaba Group, declining to name an exact amount.

Alibaba said in late October that it will invest 1.8 billion yuan ($285 million) to help small and medium-size merchants expand their businesses in an attempt at appeasing merchants who grew angry after the website issued plans to raise its service fees five- to 10-fold.

Tmall.com became Alibaba Group's business-to-customer website after it was spun off in June from Taobao.com, a site that allows customers to sell goods to each other. Tmall.com took up more than 50 percent of the business-to-customer market this past year, the company said on Wednesday.

"The new investment is likely to be used to improve Tmall.com's customer service rather than enlarge its market share," said Ding Jiaqi, an analyst from iResearch Consulting Group.

He said Tmall.com will not lose its dominance of the market in the short run.

The new investment could go into shipping and storage, Ding said. A large number of orders overwhelmed Tmall.com's distribution system on Nov 11, an unofficial holiday in China known as Singles Day.

"As a business website, Tmall.com will improve its infrastructure and pay more attention to providing better service to merchants and its partners in 2012," said Zhang Yong, CEO of Tmall.com. He also pledged to give merchants more marketing channels.

Last year, 100 billion yuan worth of goods were sold through Tmall.com, up 3.5 times from the amount for the previous year, Zhang said.

The number of unique visitors to Tmall.com reached 10 million in December, putting the website among the 10 most-viewed in China.

Even so, other business-to-customer websites are not going down without a fight.

"Intense competition among e-commerce companies is foreseeable in the next year, despite investors' attitudes toward making investments," said Chen Shousong, analyst from Beijing-based research company Analysys International.

"Other business-to-customer websites, such as 360buy.com, could be Tmall.com's potential competitors in the future."

Tmall.com also introduced its new Chinese name on Wednesday. The old name, which meant "Taobao mall", has been replaced by tian mao, which translates as "heavenly cat".

Analysts believe the move was meant to draw customers' attention to the site.

Meanwhile, Zhang denied that the company was considering making an initial public offering. "We will not pursue an IPO after the split from Taobao.com," he said.

Weibo gets the world talking with China

2012-01-12T09:43:00.000-08:00

Source: By Zhang Yuwei (China Daily)

NEW YORK - When Skyler Wiet signed up for Sina Weibo, the Chinese micro-blogging service, several months ago, he had more than one reason.

"My broader interest in China and social media both played a role," he said.

"Hello China. Let's get to know each other better."

That was the first message on Weibo from the New York-based public policy adviser, and it best explains why an increasing number of foreigners are using Weibo.

For Wiet, who is studying Mandarin, joining conversations on Chinese social media channels makes him better engaged with Chinese people.

"It's exciting, especially when they understand my Chinese. It can be equally eye-opening to see how Chinese people are reacting to an international event and to discover that China has someone like Feng Jie (a blogger who has 1.4 million followers on Weibo), who isn't so different from Internet celebrities and reality stars that have emerged in other parts of the world," said Wiet.

According to Sina Weibo, it now has about 450,000 users in the United States out of its total of 250 million as of late November. There is no official record of the nationality of the US users. They could be US citizens, Chinese students or people from other countries.

China's total Internet users hit 450 million early this year - larger than the whole US population - and that number is expected to grow.

Kenneth Wisnefski, founder and CEO of WebiMax, a US-based search engine optimization firm, said Sina Weibo is following the same development pattern as Twitter, which took about two years to be fully accepted before it became the dominant social media platform it is today.

One phenomenon that is getting obvious is that more and more globally recognized figures, including billionaire philanthropist Bill Gates, International Monetary Fund chief Christine Lagarde and actor Tom Cruise, are becoming Weibo users.

Weibo's overseas users mostly utilize the service to reach Chinese audiences. And for celebrities, their reason is quite simple: to promote themselves or their program in China.

Gates is a popular Sina Weibo user, currently with 2.19 million followers.

Lagarde made her Weibo debut in early November, posting her first message which reads: "Hello Sina Weibo, looking forward to sharing updates here. Christine Lagarde, Managing Director, IMF."

By the end of the day, Lagarde's account had drawn about 40,000 followers and had more than 1,000 comments. She currently commands 150,000 followers.

The site also helped politicians like San Francisco Mayor Ed Lee, a Chinese-American, to reach Chinese audiences during the recent mayoral elections.

During election day in November, Lee posted messages calling for support. Later that day the first elected Chinese-American mayor posted to his followers on the site: "Thank you San Francisco!"

Wiet, who is working on some research projects on Chinese social media platforms, said it is "a smart investment and a powerful tool to understanding what a huge portion of the global population is thinking".

"On top of all of that, I think anyone who starts getting engaged on Chinese social media channels will find out pretty quickly how interesting it can be," Wiet said.

2012-01-11T09:45:00.000-08:00

Top Stories...

Huawei reveals world's thinnest smartphone

2012-01-11T09:43:00.001-08:00

Source: Want China Times

Huawei, China's largest telecom equipment manufacturer, on Monday launched its newest smartphone, the Ascend P1 S, at the Consumer Electronics Show in Las Vegas. The company said that at 6.68 millimeters, the device is the thinnest smartphone in the world, reports Chinese-language news portal Phoenix New Media.

The Ascend P1 S features Google's Android 4.0 operating system, dual-core processing, a 4.3-inch Super AMOLED display and 8-megapixel rear-facing and 1.3-megapixel front-facing cameras.

According to the report, Huawei chairman Richard Yu said at the world's largest consumer technology tradeshow that the ultra-thin design is scheduled to hit shelves in North America, Europe and Asia in April. The price is estimated at US$400.

Based in Shenzhen, Huawei entered the consumer electronics market in 2004, aiming to becoming a global smartphone and tablet computer brand within two years. As of the third quarter of last year, it only occupied 2.4% of the global market, ranking ninth in the world and far behind market leaders Apple and Samsung.

HTC Net Profit Down 25.5% In Q4 2011

2012-01-11T09:41:00.000-08:00

Source: China Tech News

Taiwanese smartphone maker HTC has published its financial report for the fourth quarter of 2011, stating that its net profit decreased by 25.5% year-over-year during the reporting period.

This is reportedly the first time for HTC to see profit down over the last two years.

According to the report, due to the competition from Apple's iPhone and Samsung's Galaxy smartphones, HTC's net profit decreased by 25.5% year-over-year to NTD11.02 billion, which was about USD364.26 million, in the fourth quarter of 2011; and it was also lower than the expected NTD13.33 billion.

At the same time, HTC's operating revenue was NTD101.419 billion, which was about USD3.35 billion and a decrease of 2.49% compared with the same period of previous year. Though the company's performance in the fourth quarter did not achieve expectations, its net profit for the entire year of 2011 still saw 57% growth over 2010, reaching NTD62.06 billion.

On the same date, Samsung also released its performance results for the fourth quarter of 2011, stating that contributed by the sales growth of Galaxy smartphones, its operating profit growth saw a new height of 73% over previous year, reaching KRW5.2 trillion, which was about USD4.5 billion.

2012-01-10T14:04:00.000-08:00

Top Stories...

People's Daily website seeks to raise $83m through IPO

2012-01-10T14:02:00.001-08:00

Source: Xinhua via china.org.cn

People.com.cn, the website of the People's Daily newspaper, has announced plans to raise up to 527 million yuan ($83.42 million) through an initial public offering (IPO) that would create a new publicly listed news portal in China.

In a prospectus filed to the China Securities Regulatory Commission (CSRC), People's Daily Online Co Ltd said it aims to raise capital by selling 69.1 million new shares on the Shanghai Securities Exchange, accounting for a quarter of its total capitalization after the debut.

The CSRC said it will review the application on January 13.

The website is controlled by the People's Daily, which holds 79.54 percent of its shares. Other owners include China Mobile Ltd, China Unicom Ltd and China Telecom Corp, according to the prospectus.

The company's profits surged 260.54 percent in 2010 from a year earlier to reach 81.6 million yuan. Its business revenue mainly comes from online advertising, which accounted for 50.79 percent of company's total revenue in 2010, the prospectus said.

The portal plans to use the capital raised from the IPO to make technological upgrades and expand its mobile Internet services.

New Chinese Internet Rules Focus On Data Security, Web Advertising

2012-01-10T14:00:00.000-08:00

Source: China Tech News

China's Ministry of Industry and Information Technology published new security and advertising provisions for regulating the Internet information service market, effective March 15, 2012.

The provisions prohibit activities that violate the rights and interests of other Internet information service providers, including disturbing the services of other providers in a malicious way, or spreading malicious rumors about other service providers. The services mentioned cover the download, installation, running, and updating of software.

According to the provisions, Internet information service providers need to gain the consent of users and provide clear and complete software function information before downloading, installing, running, updating or uninstalling software on the terminal devices of users. Any misleading or compulsive installation or running of software is prohibited.

In regards to advertising pop-up windows, the provisions state Internet information service providers should provide obvious functional marks to shut or exit these windows within Web browsers.

The new provisions enhance protection of personal information of Chinese Internet users. By formulating regulations on collecting and use of user personal information, the provisions ask Internet information service providers to keep user personal information secure and they must not provide the information to third parties without the consent of users. If the user information is leaked or may have leaked, information service provides should implement remedial measures immediately. If the leakage has the possibility to cause serious results, the service provides should report the activities to government administrative units for further investigation.

Apple Moves a Step Closer to Offering IPhone to China Telecom Subscribers

2012-01-10T13:58:00.000-08:00

Source: Bloomberg News

Apple Inc. (AAPL) moved a step closer to accessing 33 million potential iPhone customers in China, as regulators approved specifications for a device that would run on the network of China Telecom Corp. (728)

The China Radio Management Office granted Apple’s application for a handset that operates on the CDMA2000 network standard, the regulator said in a statement posted on its website this week. The wireless standard is the third-generation network technology used by Hong Kong-listed China Telecom, China’s third-largest carrier.

Adding the standard would almost double Apple’s access to existing mobile services subscribers able to get the iPhone through a contract with a Chinese carrier. The Cupertino, California-based company would still need to get a license from China’s Telecommunications Equipment and Certification Center before it could sell the device.

“This is good for Apple as it means they’ll have a new market for the product,” said Tam Tsz-wang, who rates China Telecom shares “buy” at DBS Vickers Securities in Hong Kong.

The iPhone is now available with a service contract only through China Unicom (Hong Kong) Ltd., the nation’s second- largest carrier, which had 36.5 million 3G subscribers at the end of November. China Telecom had 33.4 million 3G mobile subscribers in the same period.

Apple’s Retail Network

The iPhone model for China Telecom would probably be based on technology similar to the iPhone version for Verizon Wireless users in the U.S., Tam at DBS Vickers said.

China Telecom rose 2.4 percent to HK$4.31 as of 2:59 p.m. in Hong Kong trading, while the city’s benchmark Hang Seng Index gained 0.7 percent. The stock has climbed 4.1 percent in the past 12 months.

Carolyn Wu, a Beijing-based spokeswoman for Apple, and Jacky Yung, a Hong Kong-based spokesman for China Telecom, both declined to comment on the timeline for the carrier’s introduction of the iPhone.

More than 2.2 million iPhones were shipped in China in the quarter ended Sept. 30, compared with 300,000 a year earlier, according to research company Gartner Inc. Apple ranked third in China’s smartphone market in the three-month period, trailing Nokia Oyj and Samsung Electronics Co., according to Gartner.

Sales of iPhones through unauthorized channels, or the so- called gray market, in China have dropped as Apple expanded its local retail network, according to Sandy Shen, an analyst at Gartner in Shanghai.

Apple has a network of more than 200 “Apple Premium Resellers” in the country that are focused on the company’s products, Chief Executive Officer Tim Cook said in October. Combined with other types of resellers and China Unicom, there are 7,000 points of sale for the iPhone in China, he said.

Online gaming market reports 32% revenue increase

2012-01-10T13:54:00.000-08:00

Source: Xinhua

XI'AN -- China's booming online gaming market raked in 42.85 billion yuan ($6.79 billion) in 2011, a 32.4-percent year-on-year increase, officials said.

Of the total revenue, domestically developed games took the lion's share of 63.4 percent (27.15 billion yuan), up 40.7 percent year-on-year, said Sun Shoushan, deputy head of the General Administration of Press and Publication, at an annual symposium on digital gaming.

The mobile gaming industry also reported rapid growth in China, with revenues up 86.8 percent to 1.7 billion yuan in 2011, said Sun.

The console gaming industry, which has faced a sluggish market in recent years due to rampant piracy and the ascendancy of online games, recorded revenues of 61 million yuan, up 301.3 percent year-on-year, as companies explored new distribution channels to boost sales.

Despite hot-red growth, Sun warned of the rampant plagiarism that has plagued China's online gaming industry. He urged domestic companies to develop more original products and iconic brands.

China has the world's largest online population, with its number of Internet users reaching 485 million by the end of June 2011, according to the China Internet Networks Information Center. The number is expected to exceed 600 million this year.

2012-01-09T09:33:00.000-08:00

Top Stories...

Apple iPhone 4S Prices Announced In China

2012-01-09T09:30:00.000-08:00

Source: China Tech News

China Unicom, the exclusive operator partner for Apple's iPhone smartphones in China, has announced the contracted prices for iPhone 4S, starting at CNY5,880.

According to China Unicom, the contracted prices for 16GB iPhone 4S is CNY5,880; for 32GB is CNY6,999; and for 64GB is CNY7,999. Meanwhile, users can choose ten different mobile fee packages with monthly prices ranging from CNY66 to CNY886.

China Unicom announced solutions for users who want to gain the iPhone 4S products for free. For those who want the 16GB and 32GB versions, they can sign a three-year contract with monthly package of CNY286; and those who want the 64GB version need to sign a three-year contract with monthly package of CNY386. If the users prefer a two-year contract, they need to pay CNY386 each month for 16GB; or a CNY586 monthly package for 32GB and 64GB phones to gain the smartphones for free.

Apple announced that it will start selling the iPhone 4S in 21 countries and regions, including the Chinese mainland, from January 13, 2012. The retail prices for the iPhone 4S without contracts are CNY4,988 for 16GB, CNY5,888 for 32GB, and CNY6,788 for 64GB in mainland China.

Meanwhile, the Chinese electronics and home appliances retailer Suning has announced that it has started accepting orders for the iPhone 4S. Customers who pay the CNY200 deposit will be first in line to get the new iPhone 4S.

Motorola, HTC Warning of Weak Smartphone Sales

2012-01-09T09:27:00.000-08:00

Source: Wall Street Journal Lorraine Luk

Strong sales by Apple Inc. and Samsung Electronics Co. squeezed the results of other smartphone manufacturers during the year-end holiday shopping period.

While major carriers like Verizon Wireless are reporting strong sales of the iPhone, and analysts say Samsung's estimate of record fourth-quarter earnings was driven by its smartphone business, rivals HTC Corp. and Motorola Mobility Holdings Inc. are reporting weaker than expected sales due to heightened competition.

HTC on Friday reported its first quarterly earnings decline in two years, as the Taiwan handset maker faced intensifying competition and slower demand for smartphones.

HTC, which grabbed market share in the U.S. and Europe through its early adoption of Google Inc.'s Android platform for mobile phones, is being challenged in those key markets by Samsung, which didn't become a force in Android phones until last year, and Apple's strong showing for its new iPhone 4S.

HTC, the world's fifth-largest smartphone maker by shipments in the third quarter, said net profit for the fourth quarter fell 26% to 11.02 billion New Taiwan dollars (US$365 million), from NT$14.8 billion a year earlier. Revenue for the period fell 2.5% to NT$101.42 billion from NT$104.01 billion.

The handset maker, which had been at the center of a widening patent battle with Apple in the U.S., declined to comment on the results.

Meanwhile, Motorola Mobility, another early Android adopter, said Friday it estimates its fourth-quarter sales will come in at $3.4 billion, below the $3.88 billion expected by analysts surveyed by Thomson Reuters. Motorola said its results were weighed down by an increasingly competitive environment for mobile devices.

The results show how smaller companies like Motorola and HTC, that earned a place in the market by being early to partner with Google to develop Android phones, are being squeezed now that bigger players are ramping up. Motorola agreed last year to be acquired by Google and said Friday the deal should close early in 2012.

Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, said this week it sold a record 4.2 million iPhones in the last quarter of 2011. In December, AT&T Inc. said it sold about 6 million smartphones in October and November amid strong sales of the iPhone.

Shares of HTC have fallen 46% since the start of last year as a result of the intense competition and uncertainties over its patent disputes with Apple.

Huawei Drops India Manufacturing Unit Plan

2012-01-09T09:23:00.000-08:00

Source: Wall Street Journal By R. Jai Krishna

NEW DELHI—Huawei Technologies Co. has dropped its plan to set up a factory in India and has contracted a unit of Flextronics International Ltd. to manufacture telecommunications equipment for local supplies, said a top executive at the Indian operations of the Chinese company.

Setting up a new local manufacturing unit doesn't make sense now because of weak demand for telecom gear in India, the executive, who didn't wish to be named, said recently.

The company, which has a small Indian unit to make fiber-optic equipment near the southern city of Chennai, had been planning to set up a factory to make more products locally, keeping in mind New Delhi's concerns that imported telecom gear may contain spyware. Also, local manufacturing would help it avoid antidumping taxes and meet some guidelines India proposes to implement.

However, recent developments in the telecom sector have prompted Huawei to go slow on local manufacturing. Telecom companies in India have been holding back on investments as regulatory uncertainty, corruption allegations and cut-throat competition have taken the sheen off the industry.

The Flextronics unit will manufacture equipment for Huawei at a factory in the southern city of Chennai, said the executive.

Singapore-based Flextronics declined to comment on whether its Indian unit had received any contracts from the Chinese company.

Getting Flextronics to manufacture equipment locally will help Huawei meet new sourcing rules in India, where the sector regulator forecasts demand for telecom equipment to grow to 965.14 billion rupees ($18.29 billion) in 2015 and to 1.70 trillion rupees in 2020, from about 547.65 billion rupees in 2010.

Currently, only 10%-13% of the demand is met from local manufacturers. The sector regulator last year suggested telecom companies should source 30% of telecom equipment locally from April. By 2020, this is proposed to be raised to 80%.

It has also proposed that telecom-gear makers should procure at least 25% of their components locally from April. This compulsory sourcing requirement could go up to 65% by 2020.

In an emailed statement, Huawei also said it is setting up a research and development campus in the southern Indian city of Bangalore.

The campus will be Huawei's largest research center outside China and will require an investment of about $150 million on top of the roughly $400 million it has spent in India on such operations in the past 10 years, the statement said.

The facility will have a capacity to employ 4,000 software professionals, it said.

The Groupon Effect in China

2012-01-07T15:34:00.000-08:00

Source: Knowledge@Wharton

In January 2011, Groupon, the world's fastest-growing company, launched its online coupon business in China, the world's fastest-growing economy. At that time, more than 2,000 Chinese group-buying clone sites were already competing aggressively in a highly saturated market. While Groupon might have pioneered the group-discount model in the Western world, the concept of group-bargaining already existed in the Chinese culture. What forces helped shape such rapid growth in this industry in China? How are group-buying companies responding to the competitive landscape? And what are the implications for Chinese consumers today?

Group-buying, or tuangou, became popular in China as early as 2005. Chinese consumers formed groups that would bargain for goods ranging from household supplies to automobiles. According to Han Zhen Hua from Beijing Foreign Studies University, a local participant, groups of individuals interested in group-buying auctions would gather in homes or conference rooms to bargain with vendors, purchasing items in large quantities to receive substantial discounts. Han once participated in a tuangou for home construction materials where food and tea were served to all. The crowd cheered whenever negotiations heated up and evolved into yelling matches between the negotiators and suppliers.

Although news of group-buying activities initially spread through word-of-mouth, online forums and blogs soon became the main form of communication. The concept of tuangou took off in China due to both the Chinese culture of bargaining and the burgeoning number of online users.

Group-buying reached the U.S.in 2008 when Groupon launched an online portal promoting coupons with group discounts. The company's rapid growth spurred its international expansion and subsequent entry into China in 2011. Some in the news media have labeled this phenomenon a "boomerang" of group-buying from China to the U.S. and now back to the country of its origin, where a host of online competitors have already put down roots. CNBC's Cris Prystay writes that "[T]here appears to be a huge demand for [an] Americanized version of tuangou." Today, the Chinese group-buying market has ballooned to nearly 5,000 sites, with several U.S.-based companies also looking to take advantage of the growing Chinese consumer appetite for tuangou.

Group-buying in China Today

How does the tuangou model work? Group-buying enables large groups of consumers to purchase vouchers online that offer up to 90% discounts at local vendors, ranging from restaurants to movie theaters to hair salons. Vouchers are also offered for a wide variety of products, such as skincare items or dietary supplements. These vouchers are available for only a limited period of time (the window can be as short as 24 hours), thus creating a sense of urgency to buy. The time limit and the attractive discount often induce impulsive purchases. Vendors also benefit from group-buying, which can attract new customers. In addition, group-buying bridges offline and online commerce by serving as a new type of Internet advertising channel for brick-and-mortar retailers.

In China, consumers are drawn to tuangou not only by the discounts, but also by the unique types of deals available. Chinese sites offer coupons on jewelry, automobiles and even real estate, items that are rarely featured in the U.S. The range of products and services available in the Chinese group-buying arena is constantly expanding. Online raffles and other innovative tactics are also employed to incentivize consumer purchases.

The first of Groupon's Chinese clones came online in March 2010. Since then, the number of tuangou companies has exploded. Estimated to be more than 1,800 at the end of 2010, group-buying websites more than doubled to 4,800 during the first half of 2011, suggesting that, on average, just over nine new sites were established each day.

Group-buying companies in China fall into three main categories. First, there are the third-party independent websites backed by venture investors. Top market players in this genre include Meituan, Lashou, Groupon.cn (a domestic clone site unaffiliated with Groupon.com) and Chicago-based Groupon's JV venture, Gaopeng. The second group comprises tuangou channels that span leading social networking sites, e-commerce and life-services portals. Taobao, Renren, Dianping and 58.com (China's Amazon, Facebook, Yelp and Craigslist, respectively) each operate their own group-buying businesses and enjoy huge market shares, given their large number of existing users. Third, deal aggregators consolidate coupon information from hundreds of group-buying sites.

Although the Chinese group-buying industry has been in existence for only 18 months, it has already attracted millions of dollars from venture capitalists. In 2010, 12 fundraising drives raised more than RMB 637 million (US$100 million). With Groupon, the largest of the global group-buying companies, completing an IPO in November, Chinese rivals have also intensified their chase for cash. Lashou, the leading Chinese deal site by revenue, completed its third funding round of RMB 700 million (US$110 million) in April 2011 and plans to go public in 2012. Meituan, the first coupon site established in China, completed its second round of financing in 2011, raising RMB 318 million (US$50 million) in July and even attracting Alibaba Group, the world's largest B2B platform, as an investor. 55tuan, a major rival of Lashou that expanded into 150 cities during 2011, claims to have collected RMB 1.3 billion (US$200 million) in funding in March 2011.

It is not hard to see why the group-buying market in China is drawing so much attention. While some research firms put the estimated sales volume in billions of dollars, most of the data suggest that tuangou sites generated somewhere between RMB 955 million and RMB 1.9 billion (US$150 million and US$300 million) in revenue in 2010. According to a Chinese market report by tuan800.com, China's group-buying market size is projected to expand tenfold in 2011, topping RMB 15.9 billion (US$2.5 billion) and rivaling the U.S. market, where industry revenue is expected to increase by 138% to RMB 17.2 billion (US$2.7 billion) in 2011. In addition, the group-buying user base in China has also expanded significantly, surging 125% during the first half of 2011 to reach 42.2 million users, or roughly 10% of all existing Internet users in the country.

A Perfect Storm for Growth

In addition to China's inherent bargaining culture, an improving telecommunication infrastructure and a rapidly changing social environment have formed the foundation for explosive growth in the group-buying industry.

China boasts the world's largest Internet market. In 2006, only 123 million Chinese used the Internet, representing a penetration rate of less than 10%. By 2010, usage had ballooned to 31.8%, equivalent to 420 million users. However, given the country's still relatively low penetration rate, user growth is expected to continue. Current estimates suggest that China is adding approximately 80 million new online users each year.

While many users access the Internet from homes and offices, China has a large number of cafés where patrons can go online for less than US$1 an hour. In fact, about a third of the entire Chinese online population surfs the web at such establishments. College students, most of whom are avid group-buying users, often frequent these cafés.

The proliferation of smartphones and upgrades to China's mobile web network has spurred tuangou activity by enabling consumers to group-buy on their mobile phones. Although China's current smartphone penetration (10%) is relatively low compared to that in the U.S., Germany and Japan, this rate still translates to a sizable 90 million smartphone users. In addition, Chinese mobile vendors offer simple web-enabled phones at attractive prices, and mobile operators provide affordable mobile data plans.

For example, China Mobile provides monthly mobile data services of 200MB for as low as RMB20 (US$3.13). By June 2010, 277 million mobile users were surfing the web using their handsets, and this number is growing rapidly. The availability of affordable phones and data plans allows users to browse online and participate increasingly in group-buying. A popular trend among college students is to microblog about group-buying deals with their mobile devices. Tuangou websites incentivize mobile microblogging by offering additional discounts or free vouchers to consumers who solicit the most comments on their microblogs for a particular deal. "My friends and I like to browse each other's microblogs for the best deals," says Pei-yun, a Shanghai tuangou user.

The increasing spending power of the "Little Emperors" also contributes to the robust online group-buying sector in China. This term describes the generation born under the one-child policy. They have no siblings with whom to compete for parental attention, and they inherit wealth from both parents and four grandparents -- or, in sum, "six pockets." However, the term is somewhat misleading, as this generation is now no longer "little": Most are in their twenties or thirties and generating income of their own.

The approximately 250 million "Little Emperors" have different consumption patterns than those of the previous generations. They are more willing to spend on impulse and use e-commerce for their shopping needs. In 2010, there were approximately 140 million online shoppers in China, which was on par with the U.S. By 2015, this figure is expected to reach 520 million. Online sales generated RMB 4.4 trillion (US$684 billion) in 2010 and are estimated to grow at a compound annual growth rate (CAGR) of 50% through 2015.

In addition, herd mentality is a common characteristic among the "Little Emperors." Cora Han, a young professional who uses tuangou frequently, explains that in "today's fast-paced environment, the quickest way to fall behind in conversations with friends is not doing what everyone else is doing." These behavioral and consumption habits are rapidly shaping the e-commerce market, which, in turn, fosters a solid foundation for online group-buying.

According to industry data, globally the most common group-buyers are college-educated professional women between the ages of 18 and 34. China is no exception. It is common to see young Chinese women at web cafés or in the office surfing the web in search of tuangou deals. Piao Mo, a price-conscious college student, purchased a RMB 75 voucher (US$11.70) for a RMB 150 (US$23.50) skin cream to sample a more expensive product normally beyond her budget.

Chinese men in their twenties and thirties are quickly becoming a core target demographic for group-buying. Kenneth Dai is a middle-class, 25-year-old Chinese professional who browses tuangou websites on a daily basis. He enjoys purchasing restaurant coupons throughpopular sites such as Lashou and Dianping. He recently spent RMB 100 (US$15.70) for a RMB 300 (US$47.10) voucher for a high-end hotpot restaurant in Beijing. The tuangou enables him to dine at restaurants that he would otherwise be unable to afford. Mo, Dai and a growing number of Chinese consumers view tuangou websites as a way to access higher-end goods and services at an affordable cost.

Boom or Bust? The Uncertain Future of Tuangou

While thousands of Chinese group-buying firms scramble for market share, the top 20 sites account for nearly 90% of all sales volume. In June 2011, the top 10 companies took in 74.8% of the total revenue, up from 69.3% the previous month. As larger and better-funded companies absorb smaller competitors, market consolidation is one factor driving the increasing share among the top players. Nevertheless, there is no consistently dominant player in the fierce group-buying battlefield, with dramatic shifts in power so commonplace. The top Chinese tuangou website, Lashou, dropped to a 5.1% market share and 10th place in June, just after it topped the sales chart (14.4% share) one month earlier, while QQtuan took the lead with a 10.0% market share, up from sixth place.

The heated competition in China has driven down the profit margins of tuangou companies significantly. In the U.S., Groupon generates a 40% to 45% gross margin with a 1:1 revenue share with vendors. In comparison, group-buying companies in China had an average gross margin of 15% to 18% in December 2010. This figure has plummeted to 5% in recent months, according to an industry report.

Despite razor-thin profit margins, companies continue to spend heavily on marketing campaigns. These campaigns are most noticeable during one's commute to work. Advertisements for Chinese group-buying companies appear prominently in subways stations and bus stops. Along one exit in Shanghai's Guoquanlu station, the only advertisements one can see are those for Groupon.cn, Meituan, Lashou and 55tuan. This comes as no surprise, as the five major group-buying companies announced they would spend up to RMB 1.3 billion (US$200 million) in marketing fees in 2011. Groupon.cn is the most aggressive of the five, allocating nearly RMB 573 million (US$90 million). Following close behind are market leader Lashou and third-place Nuomi, which announced that they would spend up to RMB 318 million (US$50 million) and RMB 191 million (US$30 million), respectively. These aggressive marketing tactics, combined with traditional word-of-mouth, continue to encourage group-buying behavior.

Given the intense competition in the saturated tuangou market, industry analysts have a dim view of the future viability of the model in China, as these companies have yet to demonstrate their ability to generate sustainable sales. The month-over-month sales increase was flat in May 2011 and 17.4% in June, a huge drop from the 26.2% figure in April and below the 19.8% monthly growth rate during the first three months of 2011. Revenue growth continued to soften, with total YTD sales at RMB 4.1 billion (US$650 million) by the end of July, significantly short of the RMB 15.9 billion (US$2.5 billion) industry revenue forecast for 2011. According to the most recent industry reports, revenue growth in Q4 is expected to drop further, to 21% from its record high of 65% in Q1.

Renren, the largest Chinese social networking site, which went public in the U.S. in May 2011, operates a group-buying portal that generated RMB 5.7 million (US$900,000) in revenue but recorded operating expenses of RMB 29.3 million (US$4.6 million) and a net loss of RMB 23.6 million (US$3.7 million) during Q1. Renren CEO Joseph Chen said it was not alone and that "at least 20% of the [group-buying] companies are losing money on their businesses." At the other extreme, Nuomi CEO Shen Bo Yang speculates that "right now, everyone is operating at a huge loss. No one can claim to have reached profitability yet. The revenue is not even enough to pay for the marketing costs." The CEO of Meituan, Wang Xing, predicted that 90% of the tuangou companies would shut down by the end of 2011. Li Kai-Fu, a prominent figure in the Chinese Internet sector and ex-president of Google Greater China, also suggested that when the group-buying war comes to an end, only about 10 firms would remain.

The entry of Chicago-based Groupon (Gaopeng) into China was met with great fanfare, as the Chinese media reported Gaopeng's aggressive plan to hire thousands of employees in its first few months of operations in the early part of 2011. However, the company recently announced a broad set of layoffs and plans to shut down unprofitable branch offices. As a former employee at Gaopeng commented, "if group-buying companies are not able to generate sustainable margins, many sites will need to close their doors in China."

Faced with the many unique challenges of the Chinese group-buying market, tuangou companies depend on their fundraising ability to survive. Some have already experienced major setbacks. 55tuan recently abandoned its plan for listing in the U.S. because it was rejected by investment banks such as Merrill Lynch, Credit Suisse and Goldman Sachs. The banks were concerned that lax accounting for the dozens of small regional coupon sites 55tuan had acquired would put its financials in question.

As the group-buying industry in China experiences consolidation and growing pains, the tuangou model will continue to develop and play a major role in the online retail market. "People are getting used to online tuangou as it evolves into one of the many ways consumers can shop, just like going to the supermarket," says Serena Zhang, a recent college graduate in Beijing and an experienced group-buyer. "While tuangou may not be the dominant shopping channel, it is becoming a part of our daily lives."

This article was written by Tae-Hyung Kim, Kevin Lam and Christopher Tsai, members of the Lauder Class of 2013.

2012-01-06T10:17:00.000-08:00

Top Stories...

HTC Profit Falls 26% Amid Stiffer Competition

2012-01-06T10:15:00.000-08:00

Source: Wall Street Journal Lorraine Luk

TAIPEI—HTC Corp. reported its first quarterly earnings decline in two years, as the Taiwan handset maker faced intensifying competition and slower demand for smartphones in a shaky global economy.

The Taoyuan-based company, which grabbed market share in the U.S. and Europe through its early adoption of Google Inc.'s Android platform for mobile phones, is being challenged in those key markets by Samsung Electronics Co., Apple Inc., Nokia Corp. and Motorola Mobility Holdings Inc., all of which have quickly expanded their premium smartphone offerings.

HTC, the world's fifth-largest smartphone maker by shipments in the third quarter, said Friday that unaudited net profit for its fiscal fourth quarter ended Dec. 31 fell 26% to 11.02 billion New Taiwan dollars (US$365 million), from NT$14.8 billion a year earlier. Revenue for the period fell 2.5% to NT$101.42 billion.

HTC, which had been at the center of a widening patent battle with Apple in the U.S., declined to comment on the results.

Analysts said investors will be watching for HTC statements on its 2012 business strategy and product development, as many expect the smartphone market to cool in a weakening global economy. In the meantime, they said HTC's share price will face continued pressure from threats to first-quarter earnings.

"The market has already expected HTC to report weak handset shipments in the first quarter as it is always a low season after strong holiday sales in the fourth quarter," said Aaron Jeng, an analyst at Nomura, "Investors are more eager to know how HTC will tap into the relatively resilient emerging markets this year when European markets are going to remain weak."

Shares of HTC, , have fallen 46% since the start of last year as a result of the intense competition and uncertainties over its patent disputes with Apple. The stock dropped 0.7% to NT$482 Friday.

Lenovo to Reorganize, Taps Ex-Acer Leader

2012-01-06T10:12:00.000-08:00

Source: Wall Street Journal By Owen Fletcher

BEIJING—Seeking to fuel growth by better tailoring its approach to different markets, Lenovo Group Ltd. said Thursday it will reorganize its geographical business units.

The Chinese personal-computer maker also said it will tap Gianfranco Lanci, a Lenovo consultant who formerly ran rival Acer Inc., to head its new Europe, Middle East and Africa division. As Acer's chief executive, Mr. Lanci was credited by analysts, investors and people within the company for forming strong relationships with distributors in Europe, crucial to the company's global growth.

Lenovo, which passed Dell Inc. in the third quarter last year to become the world's second-biggest PC vendor by unit shipments after Hewlett-Packard Co., is reorganizing to better implement what it calls its "protect and attack" strategy: protecting its core businesses in its home market and in commercial PCs, while attacking competitors in other segments by selling more mobile and consumer products and expanding in other emerging markets.

The reorganization, taking effect April 2, will create "stronger, faster and more-focused organizations to execute" that strategy, Lenovo said in a statement. Instead of its current split into three pieces—mature markets, emerging markets and China—the company will have four units: North America; China; Europe, the Middle East and Africa; and Asia Pacific and Latin America. While Mr. Lanci takes charge of the EMEA region, the company said, current Lenovo executives will head the other regions.

It was under Mr. Lanci that Acer in 2007 acquired U.S. computer maker Gateway Inc., which cut Lenovo off from acquiring Netherlands PC maker Packard Bell BV. Gateway had the right of first refusal on any such deal.

For Lenovo, this is the second major reorganization since rising to global prominence by buying International Business Machines Corp.'s PC business in 2005. In 2009, as the global financial crisis hit demand in the U.S. and Europe, it stepped back from the developed-markets drive that the IBM acquisition represented and said it would restructure to refocus on China and other emerging markets. Underlining the strategy shift, Lenovo at that time named Yang Yuanqing to replace Bill Amelio, an American, as CEO.

The company has since stretched its growth plans across more areas, looking to expand in the consumer segment in developed markets and to sell smartphones and tablets that compete with Apple Inc. devices.

The reorganization announced Thursday won't reduce the company's focus on emerging markets, a spokesman said, adding, "our strategy is the same."

Lenovo has also made more acquisitions, last year acquiring German PC maker Medion AG, for which it had said it would pay as much as €465 million (about $600 million), in cash and stock. The company last year also formed a joint venture with Japanese PC maker NEC Corp., a deal in which NEC received $175 million worth of Lenovo shares. Lenovo has the right to buy the joint venture in full as early as 2016.

Lenovo had 13.5% of the global PC market in the third quarter—when makers shipped a total of 93.3 million units—trailing only HP's 17.9%, according to market researcher IDC.

Foxconn Hiring Additional 100,000 Employees For Zhengzhou iPhone Manufacturing

2012-01-06T10:09:00.000-08:00

Source: China Tech News

Foxconn, the original equipment manufacturer for Apple products, is reportedly expanding its manufacturing capacity in 2012, aiming to increase production for iPhones and iPads to meet the ever-growing market demand.

According to reports in Chinese local media, Foxconn is cooperating with the municipal government of Zhengzhou, capital of Henan province, to double the number of its employees in the local plant. The Zhengzhou plant is Foxconn's new factory which began production on August 2, 2011, as the Taiwanese high-tech giant has begun moving its factory production to inland China. It currently has about 100,000 employees, which means an additional 100,000 jobs will be provided to job-seekers.

In 2011, Foxconn reportedly invested USD1.1 billion in the new Zhengzhou plant. On the completion of the new recruitment, the production capacity of this plant will be greatly increased and it is expected to become the world's largest smartphone manufacturing base.

Foxconn's Zhengzhou plant currently can make about 200,000 iPhones daily, and the scale may be doubled as the result of the new recruitment.

2012-01-05T10:30:00.000-08:00

Top Stories...

Lawmakers Ask State Department to Probe Huawei Business With Iran

2012-01-05T10:27:00.000-08:00

Source: Wall Street Journal By Steve Stecklow

Six U.S. lawmakers have asked the State Department to investigate whether Chinese telecommunications-equipment maker Huawei Technologies Co. has violated U.S. sanctions on Iran by supplying it with sensitive communications technology that has been used for censorship.

The lawmakers called on the department to "expeditiously investigate" whether Huawei violated U.S. sanctions passed by Congress in 2010 by providing technology to government-controlled telecoms that "has been used to restrict the speech of the Iranian people and the free flow of unbiased information in Iran." The law prohibits the federal government from contracting with companies that export to Iran technology that can be used to disrupt, monitor or restrict free speech.

The lawmakers' request came in a letter sent to Secretary of State Hillary Clinton on Dec. 22 that was made public this week. It repeatedly cites the findings of a front-page Wall Street Journal article in October that documented how Huawei's business grew in Iran following a pullback by Western companies after the government's bloody crackdown on its citizens in 2009.

The article reported, among other things, that Huawei made a pitch last year to Iranian government officials to sell equipment for a mobile news service on Iran's second-largest mobile-phone operator, MTN Irancell. According to a person who attended the meeting, Huawei representatives emphasized that, being from China, they had expertise censoring the news. Huawei won the contract.

Huawei also has provided support for technology that can allow the government to track the location of people through their cellphones, the Journal reported. Iranian human-rights groups outside Iran say there are dozens of documented cases in which dissidents were traced and arrested that way.

In a statement Wednesday, a Huawei spokesman said the Shenzhen-based company complied with all local and international laws, including in the U.S., and called the allegations "inaccurate" and "groundless."

The statement added, "We remain open and transparent and continue to conduct communications with stakeholders around the world in a manner that is sincere and fact-based."

The company also pointed to its announcement last month that it would scale back its business in Iran, where the company provides services and equipment to government-controlled telecom operators. "This has been carried out and followed strictly by our company," the statement said.

The six lawmakers—five Republicans and one Democrat—also asked the State Department to probe whether Huawei and other telecommunications companies operating in Iran are violating other U.S. sanctions by doing business with the Islamic Revolutionary Guard Corps, the country's elite special-forces unit. The Journal reported that in winning Iranian contracts, Huawei has sometimes partnered with Zaeim Electronic Industries Co., an Iranian electronics firm whose website says its clients include the unit.

The letter to the State Department was signed by Sen. Jon Kyl (R., Ariz.), Sen. Sheldon Whitehouse (D., R.I.), Sen. Jeff Sessions (R., Ala.), Sen. James Inhofe (R., Okla.), Rep. Frank Wolf (R., Va.) and Rep. Sue Myrick (R., N.C.).

A State Department spokesman didn't immediately respond to a request for comment.

Tencent Inks China Social Media Microblogging Deal With CNTV

2012-01-05T10:24:00.000-08:00

Source: China Tech News

Chinese Internet company Tencent and China Network Television have jointly announced a strategic partnership for a comprehensive social media and microblogging cooperation.

Under the cooperation, Tencent's various products, including the open-source microblog system iWeibo2.0, the search engine Soso, and the community system Discuz, will implement full interactive business cooperation with CNTV. Based on its series of products like social networking, entertainment and Internet payment, Tencent plans to help CNTV establish a complex interactive system which integrates microblogs, social networking, instant search, video interaction, and paid downloads.

The two parties have already started cooperating in community search and account intercommunication. By binding their Tencent and CNTV microblog accounts, users can publish microblogs to both platforms synchronously.

For the next step of their cooperation, the two companies will implement deeper business collaboration focusing on the microblog system. In addition, they will integrate their services and products to achieve multi-dimensional interactive features, covering microblog, forum, and one-click forwarding.

Financial terms of the deal were not available.

Lenovo to Reorganize Geographical Units

2012-01-05T10:22:00.000-08:00

China Telecom May Expand to France, Germany After Starting U.K. Service

2012-01-05T10:20:00.000-08:00

Source: Bloomberg News

China Telecommunications Corp. (728), the nation’s largest fixed-line phone company, plans to expand into more European markets after starting its first overseas wireless service in the U.K.

The service, aimed at Chinese residents, will begin in the U.K. by the end of March and expand to Germany and France if it’s successful, Ou Yan, managing director for China Telecom Europe, said in an e-mail yesterday. There are 2 million Chinese living in western Europe, Liu Changhai, the China Telecom executive responsible for regional development, said yesterday.

In the U.K., China Telecom will target the more than half a million Chinese citizens living in the country and the tourists that will flock to the Olympic Games in London in June. In China, intensifying competition has led companies including China United Network Communications Group Co. (CHTZ) to cut international roaming fees by as much as 90 percent.

“Our target customers are the Chinese communities,” Liu said in an e-mailed response to questions. “We are exploring a new market.”

London-based China Telecom Europe is a subsidiary of the state-owned parent company and isn’t part of publicly traded China Telecom Corp., said Jacky Yung, a Hong Kong-based spokesman for the listed unit.

The U.K. service will run on the network of Everything Everywhere, the joint venture between France Telecom SA (FTE) and Deutsche Telekom AG (DTE), the company said yesterday. The company will become the first Chinese operator to start a mobile virtual network outside China, Liu said.

Roaming Rates

Setting up a mobile virtual network will help China Telecom, the nation’s third-largest wireless carrier, compete on international roaming rates with China United, according to Neil Juggins, a Hong Kong-based analyst at JI Asia Research Ltd.

China Telecom will lease capacity from Everything Everywhere. It also held talks with Vodafone Group Plc (VOD)’s wholesale business, people familiar with the matter said in September.

China Telecom signed a strategic agreement with France Telecom in October to provide services for business customers across each other’s networks.

China Telecom’s wireless service ranks behind China Mobile Ltd. (941) and China Unicom (Hong Kong) Ltd. in the world’s largest mobile market by users. China had 975 million mobile subscribers at the end of November, according to the Ministry of Industry and Information Technology.

2012-01-04T10:27:00.000-08:00

Top Stories...

Huawei’s Contracts in Iran May Violate U.S. Sanctions, Six Lawmakers Say

2012-01-04T10:25:00.000-08:00

Source: Bloomberg News By Eric Engleman

Six U.S. lawmakers urged the State Department to investigate whether Huawei Technologies Co. violated U.S. law by supplying sensitive technology to Iran.

Huawei, China’s largest maker of phone equipment, said Dec. 9 it would voluntarily restrict business in Iran because of that country’s “increasingly complex situation.” The Shenzhen, China-based company said it wouldn’t seek new customers in Iran and will limit the scope of business with existing clients.

While calling Huawei’s decision on Iran a “positive step,” the lawmakers in a Dec. 22 letter to U.S. Secretary of State Hillary Clinton said the company’s “previous actions and continuing service of existing contracts with Iranian clients may violate” an Iran sanctions law passed in 2010. The letter was released yesterday by the office of Representative Sue Myrick, a North Carolina Republican.

The law, the Comprehensive Iran Sanctions, Accountability and Divestment Act, prohibits the U.S. government from “entering into or renewing a contract with a company that exports sensitive telecommunications technology to Iran,” the lawmakers wrote.

The letter was signed by Republican Senators John Kyl of Arizona, Jeff Sessions of Alabama and James Inhofe of Oklahoma; Democratic Senator Sheldon Whitehouse of Rhode Island; and Republican Representatives Frank Wolf of Virginia and Myrick.

The State Department press office didn’t immediately respond to a request for comment.

‘Strict Compliance’

Prior to its Dec. 9 announcement, “Huawei’s business in Iran was limited to providing commercial-grade telecommunications equipment to commercial operators built to global standards in strict compliance with all international laws and regulations, as well as U.S. and other sanctions regimes,” William Plummer, a Washington-based spokesman for Huawei, said in an e-mail yesterday.

Huawei said in November that it had sold telecommunications equipment and a “mobile news delivery platform” to MTN Irancell Telecommunications Services Co., Iran’s second-largest mobile provider, and denied the gear was intended for use in censorship.

In their letter, the U.S. lawmakers cited Wall Street Journal and Bloomberg News reports in October that Iranian authorities use technology purchased from foreign companies to monitor dissidents.

The State Department should also review whether telecommunications companies operating in Iran, including Huawei, have violated other U.S. sanctions, “such as those prohibiting companies from engaging in business with the Islamic Revolutionary Guard Corps,” according to the letter.

Security Concerns

Huawei’s efforts to expand in the U.S. have run into opposition from lawmakers who allege that the company is linked to China’s military, an assertion that Huawei has denied. The U.S. Commerce Department said in October it had barred Huawei from participating in a nationwide emergency network, citing national security concerns.

The U.S. House Intelligence Committee said in November it had opened an investigation into the possible security threat posed by Chinese phone-equipment makers such as Huawei. The panel said it will focus on whether the companies’ expansion in the U.S. provides opportunity for Chinese espionage and imperils the U.S. telecommunications infrastructure.

Seoul approves Samsung investment in China

2012-01-04T10:22:00.000-08:00

Source: AFP

SEOUL — South Korea on Wednesday approved Samsung Electronics' plan to build a new plant in China to produce high-tech memory chips used in tablets and smartphones, the Ministry of Knowledge Economy said.

Following the approval, the world's largest memory chip maker will select a site for the plant and seek Chinese government permission with a view to starting production in 2013, the ministry said in a statement.

South Korean firms need government approval when they build strategic, key or sensitive factories abroad.

Samsung had requested permission for its planned export of key technology relating to NAND flash memory chips. When completed, the plant will produce 10,000 12-inch wafers per month.

The approval comes after a 10-member technology security committee met twice last month to consider Samsung's need to invest in China and the risks of technology leaks.

Jun Dong-Soo, president of memory business at Samsung's device solutions, has said the new plant would help the company meet growing demand and strengthen its competitiveness in the memory business.

Demand is weak for DRAM (dynamic random access memory) chips used in personal computers, pushing prices down and giving makers an incentive to adopt more advanced technology.

The flash memory chip market is robust thanks to growing demand for mobile devices such as tablet computers and smartphones.

Samsung had 45 percent of the global DRAM market in the third quarter last year, followed by South Korea's Hynix with 21.6 percent, according to research firm IHS iSuppli.

Its share of the world market for NAND flash chips was 39.1 percent followed by Japan's Toshiba with 31.4 percent in the third quarter.

China Telecom to Launch Mobile Services in U.K.

2012-01-04T10:19:00.000-08:00

Source: Wall Street Journal By Lilly Vitorovich and Owen Fletcher

LONDON—China Telecom Corp. plans to launch mobile services in the U.K. in the first quarter after securing a network deal with British mobile operator Everything Everywhere Ltd., as the Chinese company seeks to drive growth in its mobile business and tap overseas markets.

The move follows a number of recent overseas deals by Chinese state-controlled companies that have highlighted their growing global clout and ambitions.

It is also the first time a Chinese carrier has launched mobile-virtual-network-operator services outside China, the companies said in a written statement Wednesday. A spokeswoman for Everything Everywhere said China Telecom—China's largest fixed-line operator—will "look to expand around Europe" after establishing a presence in the U.K.

China Telecom's European division will target Chinese residents and businesses in the U.K., as well as visitors to the country.

Financial details of the deal weren't disclosed.

Analysts said China Telecom might use the deal to test the company's viability in developed markets. "The scale [of the services] will likely be relatively small," CLSA analyst Elinor Leung said. "I don't think they are planning for a big expansion into developed markets."

Yan Ou, managing director of China Telecom in Europe, said, "There is a real gap in the market for the provision of tailored mobile services and competitive tariffs aimed at the growing Chinese population in the U.K."

Everything Everywhere—created in July 2010 through the merger of the U.K. businesses of Deutsche Telekom AG and France Télécom SA—is the U.K.'s biggest mobile operator by revenue. It has the biggest third-generation network in the U.K.

The China Telecom deal increases the number of partners using Everything Everywhere's telecommunications network to 24.

Other recent overseas moves by Chinese state-owned companies include a $2.5 billion deal this week between China Petrochemical Corp., or Sinopec, and Devon Energy Corp. to help develop several U.S. shale oil and natural-gas fields. Separately, Portugal's government said last month that state-controlled China Three Gorges Corp. had won the bidding for Portugal's 21% stake in EDP-Energias de Portugal SA with an offer of €2.69 billion ($3.51 billion).

2012-01-03T09:58:00.000-08:00

Top Stories...

Huawei Will Invest USD150 Million In India In 2012

2012-01-03T09:55:00.000-08:00

Source: China Tech News

Chinese telecom equipment maker Huawei has announced plans to invest up to USD150 million in India in 2012 to promote its business growth.

Sures Vaidyanathan, Huawei's spokesperson in India, told local media that Huawei is committed to the long-term development in India, and it will accelerate the development of enterprise business, terminal business, 2G capacity expansion, 3G and LTE technical platforms.

Huawei provides equipment to operators to help them offer these technologies to end-users. Huawei's Indian branch is one of the largest information and communications technology companies in the local market and it is also one of the largest broadband equipment suppliers.

Over the past ten years, Huawei has invested USD1.5 billion in the development, business, market, and manufacturing base in India, establishing the marketplace as its hub for resources and corporate social responsibility. So far, the Indian market contributes 3% of the global net income of Huawei. In 2010, the Chinese company's total revenue was CNY185.176 billion.

Huawei's major income source in India is the traditional operator business, followed by enterprise and mobile device businesses. For the year of 2012, the company plans to balance its revenue from these three sectors, said Vaidyanathan.

NetEase.com Closes Luxury Internet Shopping Website In China

2012-01-03T09:53:00.000-08:00

Source: China Retail News

Chinese Internet portal NetEase.com published a report, stating that it closed L.163.com, its luxury goods Internet shopping platform, on December 31, 2011.

L.163.com was launched in January 2011 and boasted sales of watches, bags, leather products, apparel, shoes and jewelry of the world's top luxury brands with discounts. It also promised the 100% authenticity of products; nationwide free mailing service; and the seven-day unconditional return service. However, the Internet company decided to close the website after less than one year of operation, due to poor performance.

This is not the first time for NetEase.com to close a newly launched business, according to local media reports. Prior to this, it entered the air ticket Internet booking sector, but shut it down after 80 days of operation.

Xiaomi CEO wants Taiwanese talent for his smartphone revolution

2012-01-03T09:51:00.000-08:00

Source: Want China Times Kang Chang-jung and Staff Reporter

Chinese budget smartphone maker Xiaomi Technology Co, which has enjoyed huge success with online sales of its new smartphones in China, has urged talent from Taiwan to join its team and help achieve the goal of building the company into one of the world's Top 500 corporations.

Confounding earlier market skepticism, the Beijing-based Xiaomi Tech surprised the market by garnering 300,000 pre-orders in 35 hours after opening online orders of its smartphones under the MIUI brand.

The 100,000 handsets in the company's inventory were snapped up at a price of 1,999 yuan (US$318) per unit in just three hours. In addition, the company landed on a big order for one million Xiaomi handsets per year from China Unicom, one of the country's leading state-run telecom service groups and mobile operators.

Morgan Stanley, which forecast that the number of mobile web users worldwide will surpass that of traditional web desktop users within five years, put Xiaomi Tech as the ninth largest supplier of smartphones in China in terms of market share. In late October it also rated MIUI as the top Chinese brand.

By the conservative estimation of Xiaomi Tech founder and CEO Lei Jun, sales of a single model of the company's smartphones will be able to reach 2 million handsets in 2012. Lei told Want China Times in Beijing that Xiaomi presently has only one senior executive from Taiwan — chief financial officer Yu Ming-to. Lei quickly added that Xiaomi Tech is in urgent need of a larger talent pool and would welcome professionals from across the Taiwan Strait.

Xiaomi Tech started out as a mobile phone application developer and portal provider in April 2010. The 70-member team soon expanded to 400 staff members in early December 2011. The company aims to further expand to 2,000 in 2012, meaning a recruitment drive for 1,500 people this year.

Lei said half of the Xiaomi team had previously worked at Microsoft, Motorola and Kingsoft Corporation, and are 32.5 years old on average.

Lei is now concurrently chairman of Kingsoft, one of China's leading software powerhouses with products and services covering software and online games, application software businesses, utilities software and internet security software. He said that the qualifications of Xiaomi Tech employees are in no way inferior to those working at international giants such as Google, Microsoft and Motorola.

The areas of talent needed by Xiaomi Tech covers all major fields including hardware, software and marketing operations. Lei praised Taiwan's advanced level in the field of hardware manufacturing and said a warm welcome would be extended to specialists from Taiwan with strong abilities and confidence to help build Xiaomi Tech into one of the Top 500 global corporations.

News that Yu Ming-to took up the position as CFO at Xiaomi Tech two months previously made waves in Taiwan's IT community. Yu formerly served as finance manager at the world's largest chip foundry Taiwan Semiconductor Manufacturing Co and was CFO at MediaTek, a leading company of software and microchips in Taiwan.

The current range of Xiaomi smartphones was manufactured by Inventec Appliances, an affiliate of Taiwan's Inventec Group. The contract manufacturer also works with other international mobile phone suppliers.

There were reports that Foxconn, an affiliate of Taiwan's Hon Hai Group, will also manufacture Xiaomi smartphones to help fill the company's major orders starting in 2012. Foxconn also manufactures Apple's iPhone and iPad in China.

Lei has chosen a modest name for his new venture — "xiaomi" is the Chinese word for millet. Lei said Xiaomi is an amiable and friendly name and he expressed the hope that Xiaomi can be everbody's friend.

The MIUI brand (pronounced "Me You I") represents "user interface" as UI) while MI stands both for "mobile internet and mission impossible," Lei once explained.

2012-01-02T09:48:00.000-08:00

Top Stories...

China Issues Rules on Web Competition

2012-01-02T09:44:00.001-08:00

Source: Wall Street Journal By Owen Fletcher

BEIJING—China's Ministry of Industry and Information Technology has released new regulations covering competitive practices in the country's booming Internet industry, saying they will help protect the rights of both companies and users.

The rules could help prevent poor business practices in what is one of China's more freewheeling industries, dominated by non-state-owned companies that sometimes accuse competitors of foul play.

Such disputes gained wide attention in late 2010, when the MIIT criticized major Chinese Internet companies Tencent Holdings Ltd. and Qihoo 360 Technology Co. as they publicly feuded over alleged unfair practices.

The new rules bar companies from infringing on the "legal rights and interests" of other online service providers, such as by "maliciously" interfering with services from other companies on a user's device, the MIIT said Saturday.

The rules also bar practices such as suspending services for a user "without a legitimate reason," changing a user's Internet browser settings without first gaining consent, or tricking a user into downloading software. Other parts of the rules cover issues like protecting users' information and making a company's public reviews of other online services objective.

"Competition in Internet information services is getting more intense each day and illegal incidents are gradually rising," Li Guobin, an inspector in the MIIT's politics and law section, said in a statement on the ministry website.

The rules, which take effect March 15, will help "create a favorable environment for information services," he said.

The MIIT, which didn't name any companies in its statements, said it started working on the rules in the second half of 2010—the period when it criticized Tencent and Qihoo for "improper competitive behavior." Tencent, which operates the popular QQ instant-messaging service, in November 2010 suspended operating that service for users with certain software installed from Qihoo, which makes antivirus products.

Tencent didn't immediately reply to a request for comment on the new rules. Qihoo Chief Executive Zhou Hongyi in a statement welcomed the rules. "Moving forward, there will be better protection for Qihoo 360's customers," he said.

Firms jostle for China's 950m-strong mobile web market

2012-01-02T09:43:00.000-08:00

Source: Want China Times

A report by the Beijing Business Today has put the number of Chinese mobile phone users at over 950 million, with major domestic players including Baidu, China Mobile, China Unicom and Alibaba gearing up to gain footholds in the mobile web.

Last year, efforts to expand into the mobile internet were fueled by collaborations between major multinationals and large Chinese firms. Taiwanese smartphone maker HTC and Chinese internet company Tencent jointly launched new smartphone models, while China's leading search engine, Baidu, launched a mobile application platform, Baidu Yi, which will run on phones made by American PC maker Dell.

The market has also seen a growing battle over mobile web browsers. Leading browser developer Opera made a high-profile entry into the Chinese market by launching the Chinese-language mobile browser Oupeng in conjunction with Chinese mobile phone distributor Telling Telecom.

Industry experts say that given the vast Chinese market, any mobile browser looking to become a mainstream product will have to acquire over 100 million users. Song Lin, manager for Opera China, predicts that the number of Opera's active users will breach the 100-million mark by the end of 2012.