Tuesday, May 12, 2009

China - Consumer Sector Updates

Through my good friend Mr. Tony Tsai:

Ministry of Health to launch two-year crackdown on illegal food additives
May 11, Su Zhi, deputy director of the Food Safety and Sanitation Surveillance Bureau under the Ministry of Health, says the ministry will launch a two-year crackdown on illegal food additives. He puts forward a five-point proposal on the crackdown of illegal additives, such as improving related standards on food additives and further strengthening the government's measures for food safety supervision and crackdown.

It is hard to keep China's fuel prices in line with international crude oil prices
The National Development and Reform Commission (NDRC) has published the administrative measures for crude oil prices, taking effect May 8 on a trial basis. According to the measures, China will adjust domestic fuel prices when global crude oil prices report a daily fluctuation band of more than 4% for 22 working days in a row. The launch of the measures is aimed at keeping China's fuel prices in line with international crude oil prices, in order to ensure Chinese fuel prices do not drop lower than international crude oil prices. If that happens, the Chinese government will have to increase fiscal subsidies to oil companies and the domestic oil industry and market will become disorderly. Zhou Xiaogang, an energy expert, thinks it is hard to keep China's fuel prices in line with international crude oil prices. China's oil market is not competitive. Private oil firms are still weak, and unable to compete with domestic state-owned oil giants.

PWC: there is a great deal of room to increase human capital effectiveness in China
PricewaterhouseCoopers (PWC) recently published the research report about human capital influence among China's listed enterprises for 2008. The report pointed out it is a good idea for Chinese enterprises to increase core competitiveness of human capital which can help them tackle economic crisis and realize long-term sustainable development. Compared with enterprises in the US and Europe, there is a great deal of room for China-listed enterprises to increase human capital effectiveness.

Expert: consumer prices expected to show rise in second half of year
May 11, the National Bureau of Statistics says that China's Consumer Price Index (CPI) fell 1.5% in April from a year earlier, marking the third straight decline. China's Producer Price Index (PPI) fell 6.6% in April year-on-year, marking the fifth straight decline. But some experts believe that consumer prices should show an upward trend in the second half of the year. The government stimulus package and explosive loan growth will drive industrial product prices and consumer prices up.

Beijing to reduce 300 hectares of land supply for commercial buildings and to loosen control on foreign investment in local real estate market
May 11, the Beijing Municipal Bureau of Land and Resources publishes the 2009 annual land supply plan. By the end of last year, approximately 40m sq m of commercial buildings had not been sold, which is expected to meet market demand for two to three years. Compared with last year, land supplied for the construction of commercial buildings in Beijing this year will be down by 300 hectares. The Beijing Land Reserve Center will loosen control on foreign investment in Beijing's real estate market.

Coca-Cola claims it will focus on existing brands and give up take over of Huiyuan Juice. According to media reports, Coca-Cola is set to abandon any attempt to take over the Huiyuan Juice Group. Buying a small stake with no decision power is not what Coca-Cola wants at all. May 12, Coca-Cola says in a statement, "We were disappointed, but we also respect the Ministry of Commerce's decision not to approve our proposed purchase of the Huiyuan Juice business. We are now focusing all of our energies and expertise on growing our existing brands and continuing to innovate with new brands, including in the juice segment. Beyond that, it is our policy not to comment on speculation."

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