Wednesday, July 27, 2005
LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)
July 23, 2005 Saturday
USA Edition 2
SECTION: FT MONEY - MARKETS WEEK; Pg. 11
LENGTH: 641 words
HEADLINE: Renminbi revaluation just 'first small step' GLOBAL OVERVIEW
BYLINE: By DAVE SHELLOCK
BODY:
Currencies were the focus for financial markets this week as investors digested news that China was revaluing the renminbi and the latest words of wisdom from Alan Greenspan, the Federal Reserve chairman.
By contrast, equities were little moved over the week with markets for the most part brushing aside another series of terrorist incidents in London.
China announced it was revaluing the renminbi by 2.1 per cent against the dollar and said it would replace its peg to the US unit with a basket of currencies.
The move was given a mixed response by analysts.
"We view this as a positive event for the global economy and for equity markets and one that reinforces our bullish cyclical calls across the region on the back of improving global industrial activity," said Goldman Sachs.
But Steve Barrow, currency economist at Bear Stearns, said the move was very much in line with expectations.
"In this regard, it is not a big deal," he said. "It is more like the first small step on the long path to significant renminbi appreciation.
"The main conclusion as far as we are concerned is that, if the US wants this change to result in a lower dollar/renminbi, it will have to accept, or even encourage, a weaker dollar against other major currencies such as the euro and yen."
The greenback duly tumbled against the yen before staging a modest recovery yesterday. The yen made strong gains against sterling and the euro.
Analysts said the yen would benefit from expectations that a strong renminbi would prompt other Asian countries to allow their
currencies to appreciate, boosting Japanese competitiveness.
US Treasury bonds also suffered a sharp sell-off following the news from Beijing, with analysts suggesting the revaluation could weigh on Chinese purchases of US bonds.
The yield on the 10-year Treasury bond drifted back yesterday but was still up sharply from levels seen at the start of the week.
Bond yields were also pushed up by the other big market event of the week - Mr Greenspan's midweek testimony on monetary policy to Congress.
He gave an upbeat assessment of the US economy and confirmed that, as expected, interest rates would continue to be raised to keep inflation at bay.
The question of how high the US central bank raises borrowing costs is one of the uncertainties facing the market, particularly with increasingly robust US house prices fuelling consumer spending.
Ian Harwood, global head of economics and strategy at Dresdner Kleinwort Wasserstein, believes it is very unlikely that rates will be raised specifically to deflate home prices.
"The Fed didn't act thus vis-a-vis the late 1990s equity bubble and, crucially, subsequently argued it was right to behave as it did," he said.
"Fed officials, moreover, continue to deny the existence of a housing bubble, though, interestingly, they are now talking in terms of 'froth'."
World equity markets put in mixed performances. Wall Street was little changed over the week as the quarterly US reporting season got into full swing. At the close yesterday, the Dow Jones Industrial Average was up 0.2 per cent while the S&P 500 was up by the same percentage.
The Nasdaq Composite index inched up 0.1 per cent following positive earnings news from the technology bellwether IBM.
European stocks touched a three-year high on Tuesday but subsequently retreated to end the week virtually unchanged.
In Asia, Tokyo's Nikkei 225 Average slipped 0.5 per cent. Car stocks fell back sharply yesterday following the renminbi's revaluation.
Elsewhere in the region, Australian and Indonesian shares hit record highs, while Singapore was boosted by a loosening of restrictions on property lending.
Oil prices fell steadily through the week before staging a modest rebound yesterday.
Another large build in US distillate inventories plus a weakening of Hurricane Emily were behind the drop in crude prices.
LOAD-DATE: July 22, 2005
Financial Times (London, England)
July 23, 2005 Saturday
USA Edition 2
SECTION: FT MONEY - MARKETS WEEK; Pg. 11
LENGTH: 641 words
HEADLINE: Renminbi revaluation just 'first small step' GLOBAL OVERVIEW
BYLINE: By DAVE SHELLOCK
BODY:
Currencies were the focus for financial markets this week as investors digested news that China was revaluing the renminbi and the latest words of wisdom from Alan Greenspan, the Federal Reserve chairman.
By contrast, equities were little moved over the week with markets for the most part brushing aside another series of terrorist incidents in London.
China announced it was revaluing the renminbi by 2.1 per cent against the dollar and said it would replace its peg to the US unit with a basket of currencies.
The move was given a mixed response by analysts.
"We view this as a positive event for the global economy and for equity markets and one that reinforces our bullish cyclical calls across the region on the back of improving global industrial activity," said Goldman Sachs.
But Steve Barrow, currency economist at Bear Stearns, said the move was very much in line with expectations.
"In this regard, it is not a big deal," he said. "It is more like the first small step on the long path to significant renminbi appreciation.
"The main conclusion as far as we are concerned is that, if the US wants this change to result in a lower dollar/renminbi, it will have to accept, or even encourage, a weaker dollar against other major currencies such as the euro and yen."
The greenback duly tumbled against the yen before staging a modest recovery yesterday. The yen made strong gains against sterling and the euro.
Analysts said the yen would benefit from expectations that a strong renminbi would prompt other Asian countries to allow their
currencies to appreciate, boosting Japanese competitiveness.
US Treasury bonds also suffered a sharp sell-off following the news from Beijing, with analysts suggesting the revaluation could weigh on Chinese purchases of US bonds.
The yield on the 10-year Treasury bond drifted back yesterday but was still up sharply from levels seen at the start of the week.
Bond yields were also pushed up by the other big market event of the week - Mr Greenspan's midweek testimony on monetary policy to Congress.
He gave an upbeat assessment of the US economy and confirmed that, as expected, interest rates would continue to be raised to keep inflation at bay.
The question of how high the US central bank raises borrowing costs is one of the uncertainties facing the market, particularly with increasingly robust US house prices fuelling consumer spending.
Ian Harwood, global head of economics and strategy at Dresdner Kleinwort Wasserstein, believes it is very unlikely that rates will be raised specifically to deflate home prices.
"The Fed didn't act thus vis-a-vis the late 1990s equity bubble and, crucially, subsequently argued it was right to behave as it did," he said.
"Fed officials, moreover, continue to deny the existence of a housing bubble, though, interestingly, they are now talking in terms of 'froth'."
World equity markets put in mixed performances. Wall Street was little changed over the week as the quarterly US reporting season got into full swing. At the close yesterday, the Dow Jones Industrial Average was up 0.2 per cent while the S&P 500 was up by the same percentage.
The Nasdaq Composite index inched up 0.1 per cent following positive earnings news from the technology bellwether IBM.
European stocks touched a three-year high on Tuesday but subsequently retreated to end the week virtually unchanged.
In Asia, Tokyo's Nikkei 225 Average slipped 0.5 per cent. Car stocks fell back sharply yesterday following the renminbi's revaluation.
Elsewhere in the region, Australian and Indonesian shares hit record highs, while Singapore was boosted by a loosening of restrictions on property lending.
Oil prices fell steadily through the week before staging a modest rebound yesterday.
Another large build in US distillate inventories plus a weakening of Hurricane Emily were behind the drop in crude prices.
LOAD-DATE: July 22, 2005
LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - Document
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
July 23, 2005 Saturday
London Edition 3
SECTION: FRONT PAGE - COMPANIES & MARKETS; Pg. 1
LENGTH: 446 words
HEADLINE: Nanjing wins Rover for Pounds 50m
BYLINE: By JAMES MACKINTOSH
BODY:
* Deal will create fewer jobs than rival bids
* Creditors to get 3 1/2p in the pound at most
* Rival Chinese bidders set for court
Nanjing Automobile, China's oldest vehicle manufacturer, last night bought MG Rover, the failed Birmingham carmaker, for a little more than Pounds 50m.
The deal will frustrate rival bidder Shanghai Automotive Industry Corp, China's biggest carmaker, and set the stage for a legal battle between the two state-owned manufacturers.
The outcome is likely to prove controversial as Nanjing plans to create fewer British jobs than either SAIC's bid or that of David James, the corporate troubleshooter backed by property entrepreneur Robert Tchenguiz. But Tony Lomas, administrator, said Nanjing's bid was "materially higher" than others.
Nanjing was also indirectly responsible for Rover's collapse. The company failed after a joint attempt by Nanjing and SAIC to buy control this year was withdrawn because of Rover's financial weakness.
Nanjing is planning to ship much of the Rover equipment from Birmingham to a plant in eastern China. It also wants to start production in the West Midlands - probably at Rover's Longbridge plant - of the MG TF sports car and the MG ZT saloon.
"The acquisition of Rover gives Nanjing the opportunity to establish a presence in Europe, creating high value MG cars in the UK, complemented by volume production of a range of vehicles in China," Nanjing said.
Up to 2,000 jobs would be created, according to people familiar with the plans, although finance needs to be found for the UK operation. Unions representing former Rover workers had strongly backed the SAIC bid, and Tony Woodley, general-secretary of the Transport and General Workers Union said it was "disappointing that the administrators have not seen fit to allow SAIC to complete its bidding process". He is seeking urgent talks with Nanjing about its plans.
Arup, the engineering consultancy, and China Ventures, a consultancy run by fixer Qu Li, advised Nanjing and may take stakes in the British arm of the company.
The purchase price means Rover creditors, owed more than Pounds 1.4bn, will get a maximum of just 3 1/2 pence in the pound, and probably far less after fees for PwC, the administrator, have been deducted.
SAIC and Nanjing could end up in court, as SAIC believes it owns the designs to Rover's small and large cars and the engines, for which it paid Pounds 67m last year before the collapse.
SAIC said it was "reserving our options, including legal options". It added: "We are concerned that the decision wasn't properly thought through. Our bid was a much better offer in terms of employment in the UK." Analysis, Page 6 Newsfile, www.ft.com/rover
LOAD-DATE: July 22, 2005
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
July 23, 2005 Saturday
London Edition 3
SECTION: FRONT PAGE - COMPANIES & MARKETS; Pg. 1
LENGTH: 446 words
HEADLINE: Nanjing wins Rover for Pounds 50m
BYLINE: By JAMES MACKINTOSH
BODY:
* Deal will create fewer jobs than rival bids
* Creditors to get 3 1/2p in the pound at most
* Rival Chinese bidders set for court
Nanjing Automobile, China's oldest vehicle manufacturer, last night bought MG Rover, the failed Birmingham carmaker, for a little more than Pounds 50m.
The deal will frustrate rival bidder Shanghai Automotive Industry Corp, China's biggest carmaker, and set the stage for a legal battle between the two state-owned manufacturers.
The outcome is likely to prove controversial as Nanjing plans to create fewer British jobs than either SAIC's bid or that of David James, the corporate troubleshooter backed by property entrepreneur Robert Tchenguiz. But Tony Lomas, administrator, said Nanjing's bid was "materially higher" than others.
Nanjing was also indirectly responsible for Rover's collapse. The company failed after a joint attempt by Nanjing and SAIC to buy control this year was withdrawn because of Rover's financial weakness.
Nanjing is planning to ship much of the Rover equipment from Birmingham to a plant in eastern China. It also wants to start production in the West Midlands - probably at Rover's Longbridge plant - of the MG TF sports car and the MG ZT saloon.
"The acquisition of Rover gives Nanjing the opportunity to establish a presence in Europe, creating high value MG cars in the UK, complemented by volume production of a range of vehicles in China," Nanjing said.
Up to 2,000 jobs would be created, according to people familiar with the plans, although finance needs to be found for the UK operation. Unions representing former Rover workers had strongly backed the SAIC bid, and Tony Woodley, general-secretary of the Transport and General Workers Union said it was "disappointing that the administrators have not seen fit to allow SAIC to complete its bidding process". He is seeking urgent talks with Nanjing about its plans.
Arup, the engineering consultancy, and China Ventures, a consultancy run by fixer Qu Li, advised Nanjing and may take stakes in the British arm of the company.
The purchase price means Rover creditors, owed more than Pounds 1.4bn, will get a maximum of just 3 1/2 pence in the pound, and probably far less after fees for PwC, the administrator, have been deducted.
SAIC and Nanjing could end up in court, as SAIC believes it owns the designs to Rover's small and large cars and the engines, for which it paid Pounds 67m last year before the collapse.
SAIC said it was "reserving our options, including legal options". It added: "We are concerned that the decision wasn't properly thought through. Our bid was a much better offer in terms of employment in the UK." Analysis, Page 6 Newsfile, www.ft.com/rover
LOAD-DATE: July 22, 2005
LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - Document
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
July 23, 2005 Saturday
London Edition 2
SECTION: NATIONAL NEWS; Pg. 6
LENGTH: 734 words
HEADLINE: Nanjing's purchase of MG Rover is just the start of its difficulties The Chinese manufacturer faces serious logistical, financial, legaland administrative challenges in its quest to turn the failed Longbridge carmaker into a success, writes James Mackintosh
BYLINE: By JAMES MACKINTOSH
BODY:
As Nanjing Automobile signed contracts to buy MG Rover, the failed carmaker, it marked the end of three months of complex bidding by the Chinese manufacturer against more than 100 interested buyers.
As Nanjing's advisers, left the London offices of Herbert Smith, their lawyers, after signing contracts last night their sense of jubilation was clear. But the challenges ahead may lead to a sinking feeling.
Even taking possession of the keys to the gates of Longbridge, Rover's sprawling Birmingham factory, is not easy: new contracts will have to be agreed with the security company manning the entrances.
At least Nanjing and Arup, the engineering consultancy advising it, will not have problems navigating the maze of production facilities at the site. Nanjing is also being advised by Nick Stephenson, deputy chairman of Phoenix Venture Holdings, which owned Rover until it went bust. It is also being helped by Qu Li, head of consultancy China Ventures.
After the first few days of administrative work securing telephone and utility connections and continuing maintenance contracts, the real job will be more difficult.
"Whoever wins the bidding, no production is going to start for at least a year," said a senior adviser to one of the bidders yesterday, before the deal's completion.
The first big problems that will be faced by Nanjing are moving production lines to China and raising funds to support the UK operations.
The logistical challenge is huge. Most of the engine production, which includes a foundry, plus two production lines including large, complex robots, must be shipped from a built-up area of Birmingham to eastern China. Then it will have to be reassembled, and made to work.
The financial challenge is also large. An investor must be found to take a majority stake in the UK business, which is likely to start work under management selected by Arup. Fraser Welford-Winton, head of Rover's engine business who led an unsuccessful management offer for MG, is seen as a likely candidate to run the business.
The UK business will have to be set up, possibly at a new site. It is unclear whether Nanjing will keep control of part of the Longbridge factory or move elsewhere in the West Midlands. But the plan is to build the MG TF sports car and the MG ZT saloon, and eventually to complete small and medium cars shipped as kits from China. UK employment could reach 2,000.
The main problems it will face with the production start-up are:
*Engineering: Nanjing will have to finish development work on the engines to meet new European emissions standards that come into effect next January. They will also have to test production lines to ensure they still function, even before shipping them to China.
*Purchasing: suppliers must be found for many components. Some, such as StadCo, which provided the body for the MG TF sports-car, have closed factories and may be unwilling to invest in facilities for a new Rover owner after losing millions when the company collapsed. Components may be bought from suppliers in Asia to cut costs. Shanghai Automotive Industry Corp estimated this could save Dollars 1,500 (Pounds 870) per car but it will add to delays, as safety-critical parts must be tested.
*Distribution: dealers, like suppliers, were owed large sums when Rover failed, and many have now moved to other brands or closed down. Finding high-quality outlets ready to tie their future to the new company could involve setting up a network of dealerships from scratch.
*Staffing: any buyer will rely on recruiting staff, initially engineers and managers, familiar with Rover and its facilities. But with production many months away, former line workers should not expect to start working for the new owner until next year, by which time many will have found new jobs.
*Intellectual property: one of the first people likely to be brought in by the buyer is a lawyer to defend Rover's designs. Design rights for the engines, Rover 25 small car and the 75 large saloon were sold to SAIC last year for Pounds 67m. Honda has removed or destroyed blueprints for structural parts of the Rover 45 mid-sized car, based in part on the old Honda Civic. The sportscar designs were transferred to SAIC by mistake this year. SAIC has promised "robust" action to defend its rights, which it says extend to the MG range. Nanjing and PwC, the administrator, believe most of the MG range was excluded from the deal.
LOAD-DATE: July 22, 2005
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
July 23, 2005 Saturday
London Edition 2
SECTION: NATIONAL NEWS; Pg. 6
LENGTH: 734 words
HEADLINE: Nanjing's purchase of MG Rover is just the start of its difficulties The Chinese manufacturer faces serious logistical, financial, legaland administrative challenges in its quest to turn the failed Longbridge carmaker into a success, writes James Mackintosh
BYLINE: By JAMES MACKINTOSH
BODY:
As Nanjing Automobile signed contracts to buy MG Rover, the failed carmaker, it marked the end of three months of complex bidding by the Chinese manufacturer against more than 100 interested buyers.
As Nanjing's advisers, left the London offices of Herbert Smith, their lawyers, after signing contracts last night their sense of jubilation was clear. But the challenges ahead may lead to a sinking feeling.
Even taking possession of the keys to the gates of Longbridge, Rover's sprawling Birmingham factory, is not easy: new contracts will have to be agreed with the security company manning the entrances.
At least Nanjing and Arup, the engineering consultancy advising it, will not have problems navigating the maze of production facilities at the site. Nanjing is also being advised by Nick Stephenson, deputy chairman of Phoenix Venture Holdings, which owned Rover until it went bust. It is also being helped by Qu Li, head of consultancy China Ventures.
After the first few days of administrative work securing telephone and utility connections and continuing maintenance contracts, the real job will be more difficult.
"Whoever wins the bidding, no production is going to start for at least a year," said a senior adviser to one of the bidders yesterday, before the deal's completion.
The first big problems that will be faced by Nanjing are moving production lines to China and raising funds to support the UK operations.
The logistical challenge is huge. Most of the engine production, which includes a foundry, plus two production lines including large, complex robots, must be shipped from a built-up area of Birmingham to eastern China. Then it will have to be reassembled, and made to work.
The financial challenge is also large. An investor must be found to take a majority stake in the UK business, which is likely to start work under management selected by Arup. Fraser Welford-Winton, head of Rover's engine business who led an unsuccessful management offer for MG, is seen as a likely candidate to run the business.
The UK business will have to be set up, possibly at a new site. It is unclear whether Nanjing will keep control of part of the Longbridge factory or move elsewhere in the West Midlands. But the plan is to build the MG TF sports car and the MG ZT saloon, and eventually to complete small and medium cars shipped as kits from China. UK employment could reach 2,000.
The main problems it will face with the production start-up are:
*Engineering: Nanjing will have to finish development work on the engines to meet new European emissions standards that come into effect next January. They will also have to test production lines to ensure they still function, even before shipping them to China.
*Purchasing: suppliers must be found for many components. Some, such as StadCo, which provided the body for the MG TF sports-car, have closed factories and may be unwilling to invest in facilities for a new Rover owner after losing millions when the company collapsed. Components may be bought from suppliers in Asia to cut costs. Shanghai Automotive Industry Corp estimated this could save Dollars 1,500 (Pounds 870) per car but it will add to delays, as safety-critical parts must be tested.
*Distribution: dealers, like suppliers, were owed large sums when Rover failed, and many have now moved to other brands or closed down. Finding high-quality outlets ready to tie their future to the new company could involve setting up a network of dealerships from scratch.
*Staffing: any buyer will rely on recruiting staff, initially engineers and managers, familiar with Rover and its facilities. But with production many months away, former line workers should not expect to start working for the new owner until next year, by which time many will have found new jobs.
*Intellectual property: one of the first people likely to be brought in by the buyer is a lawyer to defend Rover's designs. Design rights for the engines, Rover 25 small car and the 75 large saloon were sold to SAIC last year for Pounds 67m. Honda has removed or destroyed blueprints for structural parts of the Rover 45 mid-sized car, based in part on the old Honda Civic. The sportscar designs were transferred to SAIC by mistake this year. SAIC has promised "robust" action to defend its rights, which it says extend to the MG range. Nanjing and PwC, the administrator, believe most of the MG range was excluded from the deal.
LOAD-DATE: July 22, 2005
LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - DocumentCopyright 2005 The Financial Times Limited
Financial Times (London, England)
July 27, 2005 Wednesday
London Edition 1
SECTION: COMPANIES INTERNATIONAL; Pg. 28
LENGTH: 358 words
HEADLINE: CNOOC assesses new Unocal setback ENERGY:
BYLINE: By STEPHANIE KIRCHGAESSNER
DATELINE: WASHINGTON, NEW YORK and HONG KONG
BODY:
CNOOC, the state-owned Chinese energy company, was yesterday assessing how its chances of sealing a deal with California-based Unocal would be affected by a Congressional move that would delay completion of a regulatory review of any takeover.
US lawmakers agreed late on Monday that CFIUS, the committee on foreign investments in the US, would be barred from completing its probe into any CNOOC-Unocal deal until three government departments complete a study of the impact of China's energy demands on US security.
The study, which must be completed within 120 days, would also investigate the level of reciprocity in US-China trade relations. The amendment, which would extend the review process by at least 51 days, is the latest in a series of setbacks for CNOOC on Capitol Hill.
Unocal shareholders are expected to vote on August 10 on an agreed Dollars 17bn offer from US rival Chevron. CNOOC has been deciding whether to raise its rival Dollars 18.5bn bid in the hope of winning the support of Unocal's board; make a hostile bid ahead of the August vote; or withdraw its offer.
CNOOC said the amendment, likely to become law as part of a wider energy bill, was "much better" than the original proposal, which would have delayed the beginning of a regulatory review of any CNOOC deal by up to six months.
The company underscored that the amendment did not strip President George W. Bush of the ultimate responsibility for accepting or rejecting the deal.
But one CFIUS lawyer said the study could have a significant impact on the regulatory review process because it would force the departments of energy, homeland security and defence to go "on the record" on issues likely to be highly critical of China.
"The substance of the report (potentially) boxes the administration in. It will be hard for CFIUS to say, 'this is a great deal, let's approve it'," the lawyer said.
Unocal investors said the amendment did not significantly alter the potential closing of a CNOOC deal.
"(The amendment) only creates a modest shift in timing," said Peter Schoenfeld, of P. Schoenfeld Asset Management, which owns Unocal shares. See Editorial Comment, Lex, World News
LOAD-DATE: July 27, 2005
Financial Times (London, England)
July 27, 2005 Wednesday
London Edition 1
SECTION: COMPANIES INTERNATIONAL; Pg. 28
LENGTH: 358 words
HEADLINE: CNOOC assesses new Unocal setback ENERGY:
BYLINE: By STEPHANIE KIRCHGAESSNER
DATELINE: WASHINGTON, NEW YORK and HONG KONG
BODY:
CNOOC, the state-owned Chinese energy company, was yesterday assessing how its chances of sealing a deal with California-based Unocal would be affected by a Congressional move that would delay completion of a regulatory review of any takeover.
US lawmakers agreed late on Monday that CFIUS, the committee on foreign investments in the US, would be barred from completing its probe into any CNOOC-Unocal deal until three government departments complete a study of the impact of China's energy demands on US security.
The study, which must be completed within 120 days, would also investigate the level of reciprocity in US-China trade relations. The amendment, which would extend the review process by at least 51 days, is the latest in a series of setbacks for CNOOC on Capitol Hill.
Unocal shareholders are expected to vote on August 10 on an agreed Dollars 17bn offer from US rival Chevron. CNOOC has been deciding whether to raise its rival Dollars 18.5bn bid in the hope of winning the support of Unocal's board; make a hostile bid ahead of the August vote; or withdraw its offer.
CNOOC said the amendment, likely to become law as part of a wider energy bill, was "much better" than the original proposal, which would have delayed the beginning of a regulatory review of any CNOOC deal by up to six months.
The company underscored that the amendment did not strip President George W. Bush of the ultimate responsibility for accepting or rejecting the deal.
But one CFIUS lawyer said the study could have a significant impact on the regulatory review process because it would force the departments of energy, homeland security and defence to go "on the record" on issues likely to be highly critical of China.
"The substance of the report (potentially) boxes the administration in. It will be hard for CFIUS to say, 'this is a great deal, let's approve it'," the lawyer said.
Unocal investors said the amendment did not significantly alter the potential closing of a CNOOC deal.
"(The amendment) only creates a modest shift in timing," said Peter Schoenfeld, of P. Schoenfeld Asset Management, which owns Unocal shares. See Editorial Comment, Lex, World News
LOAD-DATE: July 27, 2005
LexisNexis(TM) Academic - Document
LexisNexis(TM) Academic - Document
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
July 27, 2005 Wednesday
London Edition 1
SECTION: COMPANIES INTERNATIONAL; Pg. 28
LENGTH: 782 words
HEADLINE: Chinese at odds with Congress over worth of deal: Legislative amendment makes it more difficult for the Chinese group to win bid battle for the US oil company, writes Francesco Guerrera
BYLINE: By FRANCESCO GUERRERA and SHEILA MCNULTY
DATELINE: HOUSTON
BODY:
Last month, Fu Chengyu, CNOOC's chairman and chief executive, hailed the Chinese company's USDollars 18.5bn bid for the US oil and gas group Unocal as "good offer for Unocal . .. a good offer for America".
Yesterday, US lawmakers showed just how much they disagree with that statement. By passing a legislative amendment that delays the conclusion of any regulatory probe into a CNOOC/ Unocal merger by nearly two months, they pushed a rival USDollars 17.3bn cash-and-share offer from Chevron a step closer to the finishing line.
Although the amendment was watered down from a previous, more radical draft, it will make it more difficult, and probably more expensive, for Mr Fu to convince Unocal and its shareholders to accept the regulatory risks of the CNOOC's bid.
With Chevron likely to seal the deal at a Unocal shareholders' vote on August 10 unless Unocal switches its recommendation to an improved offer from the state-controlled Chinese company, Mr Fu faces an uphill task.
"There is no doubt the outcome of the Congressional meeting was negative," said a person close to CNOOC yesterday. "But it was better than it could have been and the company is still focused on the deal."
Yet, CNOOC's situation could have been completely different had Mr Fu dealt Chevron a knock-out blow by raising its offer to about USDollars 19bn earlier this month - before the US oil major sweetened its own bid.
According to a regulatory filing by Chevron, on July 15 Charles Williamson, Unocal's chief executive, urged Mr Fu "to make his best offer", arguing that "a sufficiently large increase in the proposed consideration could likely result in a conclusion of the process".
The message was clear: raise the bid and Unocal is yours. A day later, Mr Fu replied that CNOOC would consider raising its bid from the current USDollars 67 per Unocal share to USDollars 69 - an increase of some USDollars 500m.
However, somewhat unexpectedly, the Chinese executive attached two conditions. The first was that Unocal lobby together with CNOOC to defuse the mounting political hostility on Capitol Hill.
On the second, crucial, condition, accounts diverge. According to the filing, Mr Fu angered Mr Williamson by demanding that Unocal pick up the USDollars 500m break-up fee due to Chevron.
The Unocal chief rejected the deal and "expressed dissatisfaction" that Mr Fu wanted to go back on an agreement to pay the break-up fee, the Chevron document says.
People close to CNOOC dispute this version of events, which suggests Mr Fu missed a crucial chance to defeat Chevron over a relatively minor issue. In their recollection, Mr Fu requested that Unocal pay the break-up fee only in the event the deal was blocked by the White House on national security grounds. Had CNOOC succeeded in buying Unocal, it would have compensated Chevron as agreed.
In CNOOC's view, any veto would be an overtly political move as the Chinese company had already pledged to sell all of Unocal's US assets if requested by regulators.
"Having done everything possible to allay the regulators' fears, CNOOC wanted Unocal to take on the risk the deal might be blocked by events beyond our control," says a person close to CNOOC. "To walk away defeated is one thing but to walk away defeated by a political decision and having to pay Dollars 500m is another thing".
Whatever the details of the deal, Unocal's rejection means CNOOC is likely to have to withdraw that condition if it decides to raise the bid in the next few days.
At least the Chinese company can be reasonably sure that a 10 per cent premium on Chevron's offer should secure Unocal board's approval. The filing shows that on two occasions, on July 14 and July 17, when Chevron's offer was worth about USDollars 61 and CNOOC's USDollars 67 per share, the board was ready to back the Chinese company.
"The consensus of the board ... was that, in light of the current value differential between the Chevron merger agreement and the CNOOC proposal ... the board's inclination would be to withdraw its recommendation of the Chevron transaction," it says.
Given Chevron's current offer, CNOOC would have to bid about USDollars 69 per share to open that kind of gap. In its own filings, Unocal explains its decision to back Chevron's lower offer by pointing to the long delays and higher risks associated with CNOOC's offer.
But the biggest uncertainty in this takeover battle is whether Unocal regards the delay imposed by Congress as significant enough to require the Chinese company to bid more than USDollars 69. And whether, if asked to bid even higher, Mr Fu decides such an offer is good for Unocal, good for America and good for CNOOC. Additional reporting by Sheila McNulty in Houston
LOAD-DATE: July 27, 2005
Copyright 2005 The Financial Times Limited
Financial Times (London, England)
July 27, 2005 Wednesday
London Edition 1
SECTION: COMPANIES INTERNATIONAL; Pg. 28
LENGTH: 782 words
HEADLINE: Chinese at odds with Congress over worth of deal: Legislative amendment makes it more difficult for the Chinese group to win bid battle for the US oil company, writes Francesco Guerrera
BYLINE: By FRANCESCO GUERRERA and SHEILA MCNULTY
DATELINE: HOUSTON
BODY:
Last month, Fu Chengyu, CNOOC's chairman and chief executive, hailed the Chinese company's USDollars 18.5bn bid for the US oil and gas group Unocal as "good offer for Unocal . .. a good offer for America".
Yesterday, US lawmakers showed just how much they disagree with that statement. By passing a legislative amendment that delays the conclusion of any regulatory probe into a CNOOC/ Unocal merger by nearly two months, they pushed a rival USDollars 17.3bn cash-and-share offer from Chevron a step closer to the finishing line.
Although the amendment was watered down from a previous, more radical draft, it will make it more difficult, and probably more expensive, for Mr Fu to convince Unocal and its shareholders to accept the regulatory risks of the CNOOC's bid.
With Chevron likely to seal the deal at a Unocal shareholders' vote on August 10 unless Unocal switches its recommendation to an improved offer from the state-controlled Chinese company, Mr Fu faces an uphill task.
"There is no doubt the outcome of the Congressional meeting was negative," said a person close to CNOOC yesterday. "But it was better than it could have been and the company is still focused on the deal."
Yet, CNOOC's situation could have been completely different had Mr Fu dealt Chevron a knock-out blow by raising its offer to about USDollars 19bn earlier this month - before the US oil major sweetened its own bid.
According to a regulatory filing by Chevron, on July 15 Charles Williamson, Unocal's chief executive, urged Mr Fu "to make his best offer", arguing that "a sufficiently large increase in the proposed consideration could likely result in a conclusion of the process".
The message was clear: raise the bid and Unocal is yours. A day later, Mr Fu replied that CNOOC would consider raising its bid from the current USDollars 67 per Unocal share to USDollars 69 - an increase of some USDollars 500m.
However, somewhat unexpectedly, the Chinese executive attached two conditions. The first was that Unocal lobby together with CNOOC to defuse the mounting political hostility on Capitol Hill.
On the second, crucial, condition, accounts diverge. According to the filing, Mr Fu angered Mr Williamson by demanding that Unocal pick up the USDollars 500m break-up fee due to Chevron.
The Unocal chief rejected the deal and "expressed dissatisfaction" that Mr Fu wanted to go back on an agreement to pay the break-up fee, the Chevron document says.
People close to CNOOC dispute this version of events, which suggests Mr Fu missed a crucial chance to defeat Chevron over a relatively minor issue. In their recollection, Mr Fu requested that Unocal pay the break-up fee only in the event the deal was blocked by the White House on national security grounds. Had CNOOC succeeded in buying Unocal, it would have compensated Chevron as agreed.
In CNOOC's view, any veto would be an overtly political move as the Chinese company had already pledged to sell all of Unocal's US assets if requested by regulators.
"Having done everything possible to allay the regulators' fears, CNOOC wanted Unocal to take on the risk the deal might be blocked by events beyond our control," says a person close to CNOOC. "To walk away defeated is one thing but to walk away defeated by a political decision and having to pay Dollars 500m is another thing".
Whatever the details of the deal, Unocal's rejection means CNOOC is likely to have to withdraw that condition if it decides to raise the bid in the next few days.
At least the Chinese company can be reasonably sure that a 10 per cent premium on Chevron's offer should secure Unocal board's approval. The filing shows that on two occasions, on July 14 and July 17, when Chevron's offer was worth about USDollars 61 and CNOOC's USDollars 67 per share, the board was ready to back the Chinese company.
"The consensus of the board ... was that, in light of the current value differential between the Chevron merger agreement and the CNOOC proposal ... the board's inclination would be to withdraw its recommendation of the Chevron transaction," it says.
Given Chevron's current offer, CNOOC would have to bid about USDollars 69 per share to open that kind of gap. In its own filings, Unocal explains its decision to back Chevron's lower offer by pointing to the long delays and higher risks associated with CNOOC's offer.
But the biggest uncertainty in this takeover battle is whether Unocal regards the delay imposed by Congress as significant enough to require the Chinese company to bid more than USDollars 69. And whether, if asked to bid even higher, Mr Fu decides such an offer is good for Unocal, good for America and good for CNOOC. Additional reporting by Sheila McNulty in Houston
LOAD-DATE: July 27, 2005
Monday, July 25, 2005
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私募基金现身海尔并购案
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http://finance.sina.com.cn 2005年06月29日 11:52 和讯网－《财经》杂志
□本刊记者 何华峰/文
在海尔的美国收购案中，华尔街的私募基金扮演了重要角色。
6月20日，美国家电制造巨头——美泰克(Maytag，纽约证交所代码：MYG)公告称，中国的海尔集团已经组建了竞标团，并已向它发出初步收购建议书。
美泰克的年营业额为47亿美元左右，是美国最大的家电制造商之一，但该公司近年经营情况每况愈下。一旦收购成功，海尔将成为全球最大的家电厂商之一。这也将成为继联想收购IBM的PC业务之后，中国企业的又一重大海外收购。
引人注目的是，与海尔合作的是两家在美国颇具知名度的私募基金——贝恩投资(Bain Capital)和黑石投资(Blackstone Capital)。在此前的联想收购IBM的PC业务和中国网通收购亚洲电讯案中，私募基金的影子也曾闪现过，不过均没有海尔收购案来得那么突出。
易凯资本有限公司首席执行官王冉评价称，“这是美国私募基金第一次尝试将中国产业资本带到美国。事实上这种需求很大，中国企业手里没有足够的现金去做真正的收购，往往需要境外金融资本的介入，而国际金融资本也看到了产业整合的趋势。”
海尔此次是以海尔美国贸易公司的名义出面的，竞标团的出价是每股16美元，高于主要竞争对手瑞坡德(Ripplewood Holdings)领导的竞标团的每股14美元的出价。瑞坡德也是美国的一家私募基金。
与中海油收购Unocal相仿，海尔竞标团的收购建议比对手瑞坡德的晚了一个月左右。今年早在5月19日，美泰克发布公告称，瑞坡德已经与它达成了收购协议，计入瑞坡德代为承担的9.75亿美元债务，收购的总金额为21亿美元。
海尔集团与私募基金共同达成的收购方案，目前还难以获悉详情，但双方的结合并不令人奇怪。一家知名私募基金的董事总经理认为：“道理是显而易见的。家电出于全球过剩，不好经营。美泰克必须将工厂迁到亚洲或者中国——这就是私募基金为什么要找海尔。”
尽管在中国业务并不活跃，但贝恩投资和黑石投资在美国却是非常主流的基金。贝恩投资成立于1984年，迄今已经完成了200多个股权投资，总值超过170亿美元。黑石投资从1987年开始就成了私人投资的领导者，管理了超过140亿美元的资产。
私募基金的现身，大大提升了海尔的资信能力。一位从事私募基金投资的银行家说，海尔与私募基金组成了合资企业，私募基金作为竞购团的股东，对卖方很有说服力。“在并购中需要确定的一点是，交易时买方的财务安排不会出问题。”
海尔的初步收购建议书显示，美林将为此项收购提供债权融资。这也应拜贝恩投资和黑石投资所赐。
过桥贷款是收购中的重要资金来源。但是，海尔在海外的上市公司规模很小，因而过桥贷款十分不便。联想购买IBM时，过桥贷款是重要的融资方式。这部分原因是由于联想的股票是香港上市，市值大，流通性也好。中海油在收购Unocal的要约中，高盛、摩根大通和中国工商银行向其提供90亿美元的过桥贷款。
高盛亚洲副董事长、直接投资部联席主管宋学仁认为，海尔模式代表着未来趋势。“对于私募基金来说，中国现在到处是全世界最热的市场——无论中国作为投资方收购海外资产，还是外国投资者到中国来收购资产，因为中国经济的成长提供了很多机会。”
点击此处查询全部海尔新闻
http://finance.sina.com.cn/j/20050629/11521737773.shtml
私募基金现身海尔并购案
--------------------------------------------------------------------------------
http://finance.sina.com.cn 2005年06月29日 11:52 和讯网－《财经》杂志
□本刊记者 何华峰/文
在海尔的美国收购案中，华尔街的私募基金扮演了重要角色。
6月20日，美国家电制造巨头——美泰克(Maytag，纽约证交所代码：MYG)公告称，中国的海尔集团已经组建了竞标团，并已向它发出初步收购建议书。
美泰克的年营业额为47亿美元左右，是美国最大的家电制造商之一，但该公司近年经营情况每况愈下。一旦收购成功，海尔将成为全球最大的家电厂商之一。这也将成为继联想收购IBM的PC业务之后，中国企业的又一重大海外收购。
引人注目的是，与海尔合作的是两家在美国颇具知名度的私募基金——贝恩投资(Bain Capital)和黑石投资(Blackstone Capital)。在此前的联想收购IBM的PC业务和中国网通收购亚洲电讯案中，私募基金的影子也曾闪现过，不过均没有海尔收购案来得那么突出。
易凯资本有限公司首席执行官王冉评价称，“这是美国私募基金第一次尝试将中国产业资本带到美国。事实上这种需求很大，中国企业手里没有足够的现金去做真正的收购，往往需要境外金融资本的介入，而国际金融资本也看到了产业整合的趋势。”
海尔此次是以海尔美国贸易公司的名义出面的，竞标团的出价是每股16美元，高于主要竞争对手瑞坡德(Ripplewood Holdings)领导的竞标团的每股14美元的出价。瑞坡德也是美国的一家私募基金。
与中海油收购Unocal相仿，海尔竞标团的收购建议比对手瑞坡德的晚了一个月左右。今年早在5月19日，美泰克发布公告称，瑞坡德已经与它达成了收购协议，计入瑞坡德代为承担的9.75亿美元债务，收购的总金额为21亿美元。
海尔集团与私募基金共同达成的收购方案，目前还难以获悉详情，但双方的结合并不令人奇怪。一家知名私募基金的董事总经理认为：“道理是显而易见的。家电出于全球过剩，不好经营。美泰克必须将工厂迁到亚洲或者中国——这就是私募基金为什么要找海尔。”
尽管在中国业务并不活跃，但贝恩投资和黑石投资在美国却是非常主流的基金。贝恩投资成立于1984年，迄今已经完成了200多个股权投资，总值超过170亿美元。黑石投资从1987年开始就成了私人投资的领导者，管理了超过140亿美元的资产。
私募基金的现身，大大提升了海尔的资信能力。一位从事私募基金投资的银行家说，海尔与私募基金组成了合资企业，私募基金作为竞购团的股东，对卖方很有说服力。“在并购中需要确定的一点是，交易时买方的财务安排不会出问题。”
海尔的初步收购建议书显示，美林将为此项收购提供债权融资。这也应拜贝恩投资和黑石投资所赐。
过桥贷款是收购中的重要资金来源。但是，海尔在海外的上市公司规模很小，因而过桥贷款十分不便。联想购买IBM时，过桥贷款是重要的融资方式。这部分原因是由于联想的股票是香港上市，市值大，流通性也好。中海油在收购Unocal的要约中，高盛、摩根大通和中国工商银行向其提供90亿美元的过桥贷款。
高盛亚洲副董事长、直接投资部联席主管宋学仁认为，海尔模式代表着未来趋势。“对于私募基金来说，中国现在到处是全世界最热的市场——无论中国作为投资方收购海外资产，还是外国投资者到中国来收购资产，因为中国经济的成长提供了很多机会。”
点击此处查询全部海尔新闻
http://finance.sina.com.cn/j/20050629/11521737773.shtml
Sunday, July 24, 2005
People's Daily Online -- Foreign investors not allowed to take lion's share in China's steel companies
People's Daily Online -- Foreign investors not allowed to take lion's share in China's steel companies
Home >> Business
UPDATED: 09:34, July 21, 2005
Foreign investors not allowed to take lion's share in China's steel companies
Foreign investors have not yet been allowed to take the lion's share in China's steel and iron companies, according to a new policy released by the National Development and Reform Commission Wednesday.
China released its first state policy on the iron and steel sectors Wednesday, raising the industrial threshold for foreign investors into China's steel and iron industry.
According to the new policy, foreign steel companies must have full intellectual property rights on iron and steel products if they want to invest in China. Their output of common steel in the previous year must reach at least 10 million tons, or that of high-alloy steel must reach 1 million tons.
If the foreign investor is not in the iron and steel business, it must prove strong financial capability and high credibility by paperwork from banks and accounting firms.
Source: Xinhua
Home >> Business
UPDATED: 09:34, July 21, 2005
Foreign investors not allowed to take lion's share in China's steel companies
Foreign investors have not yet been allowed to take the lion's share in China's steel and iron companies, according to a new policy released by the National Development and Reform Commission Wednesday.
China released its first state policy on the iron and steel sectors Wednesday, raising the industrial threshold for foreign investors into China's steel and iron industry.
According to the new policy, foreign steel companies must have full intellectual property rights on iron and steel products if they want to invest in China. Their output of common steel in the previous year must reach at least 10 million tons, or that of high-alloy steel must reach 1 million tons.
If the foreign investor is not in the iron and steel business, it must prove strong financial capability and high credibility by paperwork from banks and accounting firms.
Source: Xinhua
People's Daily Online -- China issues new policy on steel
People's Daily Online -- China issues new policy on steel
Home >> Business
UPDATED: 09:35, July 21, 2005
China issues new policy on steel
China issued its first state policy on the iron and steel sector Wednesday, raising the industrial thresholds for foreign investors and imposing tighter controls on market access.
According to the new policy, foreign steel companies who plan to invest in China must have full intellectual property rights on their iron and steel products. Their output of common steel in the previous year must reach at least 10 million tons. That of high-alloy steel must reach one million tons.
If the foreign investor is not in iron and steel business, it must prove strong financial capability and high credibility by paperwork from the banks and accounting firms, said the new policy.
China is the world largest iron and steel producer as well as consumer, said Liu Tienan, director of the industrial department of the National Development and Reform Commission. But it is entering a critical moment when the whole sector is being strained by numerous problems like overheated investment, improper industrial structure, poor quality of products and worsening environmental pollution.
Through the new policy, China expects to guide the direction of foreign investment into China's steel and iron sector and put the sector on the right track of development, said Liu.
Liu stressed an important point in the new policy: foreign investors can not set up new conglomerates in China. Foreign capital should be invested in the upgrade or removal of existing conglomerates.
Actually, no more conglomerates, no matter if they are funded by domestic capital or foreign capital, will be approved in principle, said Liu.
China will tighten its control of the production capacity of the iron and steel industry to rein in the total output, said Liu. Conglomerates will assume a bigger role amidst a new round of industrial restructuring.
The aggregated steel output of China's ten biggest players is expected to make up 50 percent of the country's total by 2010, and over 70 percent by 2020, said the new policy.
China's daily crude steel production stands at around one million tons on average in the first five months, said Liu. This year's output is expected to exceed 3 million tons.
Source: Xinhua
Home >> Business
UPDATED: 09:35, July 21, 2005
China issues new policy on steel
China issued its first state policy on the iron and steel sector Wednesday, raising the industrial thresholds for foreign investors and imposing tighter controls on market access.
According to the new policy, foreign steel companies who plan to invest in China must have full intellectual property rights on their iron and steel products. Their output of common steel in the previous year must reach at least 10 million tons. That of high-alloy steel must reach one million tons.
If the foreign investor is not in iron and steel business, it must prove strong financial capability and high credibility by paperwork from the banks and accounting firms, said the new policy.
China is the world largest iron and steel producer as well as consumer, said Liu Tienan, director of the industrial department of the National Development and Reform Commission. But it is entering a critical moment when the whole sector is being strained by numerous problems like overheated investment, improper industrial structure, poor quality of products and worsening environmental pollution.
Through the new policy, China expects to guide the direction of foreign investment into China's steel and iron sector and put the sector on the right track of development, said Liu.
Liu stressed an important point in the new policy: foreign investors can not set up new conglomerates in China. Foreign capital should be invested in the upgrade or removal of existing conglomerates.
Actually, no more conglomerates, no matter if they are funded by domestic capital or foreign capital, will be approved in principle, said Liu.
China will tighten its control of the production capacity of the iron and steel industry to rein in the total output, said Liu. Conglomerates will assume a bigger role amidst a new round of industrial restructuring.
The aggregated steel output of China's ten biggest players is expected to make up 50 percent of the country's total by 2010, and over 70 percent by 2020, said the new policy.
China's daily crude steel production stands at around one million tons on average in the first five months, said Liu. This year's output is expected to exceed 3 million tons.
Source: Xinhua
Friday, July 15, 2005
LexisNexis(TM) Academic - Document
Financial Times (London, England)
July 1, 2005 Friday
USA Edition 1
SECTION: FRONT PAGE - FIRST SECTION; Pg. 1
LENGTH: 472 words
HEADLINE: Chevron raises stakes in Unocal fight with call for CNOOC bid to go to WTO
BYLINE: By EDWARD ALDEN and SHEILA MCNULTY
DATELINE: HOUSTON and WASHINGTON
BODY:
Chevron yesterday called for China National Offshore Oil Corporation's unsolicited bid for Unocal to be referred to the World Trade Organisation, claiming its Asian rival was attempting to acquire a "critical resource" with "free money".
In an interview with the Financial Times, Peter Robertson, Chevron's vice-chairman, said: "There is something a little wrong with a set of trading rules that allow a government to enter a commercial playing field, in a sense, and to subsidise a bid to pick up these assets.
"If you can get free money, there is no end to this. So it seems like there is sort of a trade rules issue here that somebody needs to deal with."
Chevron claims CNOOC's Dollars 18.5bn bid for Unocal is subsidised by as much as Dollars 10 a Unocal share because of the low- or no- interest finance provided by the Chinese government. Chevron's view, Mr Robertson said, was that if China could buy "a critical resource like energy with free money, then that's not a commercial transaction at all".
CNOOC maintains its offer is purely commercial.
Mr Robertson added: "I think the country - whether it's the US or the UK or any country - ought to take a hard look at that. I think WTO rules are intended to make sure that doesn't happen."
While there is scant prospect of the issue reaching the WTO - the multilateral body has no provisions on cross-border mergers or competition policy, and weak rules on investment - Chevron's comments are likely to raise the temperature in Washington.
Congress and the Bush administration are under pressure to approve legislation that would allow US companies to use domestic anti-subsidy laws against Chinese rivals. Currently those laws - which allow for the imposition of import tariffs - offer no help because China is deemed by the US to be a "non-market economy" in which state support of private companies is ubiquitous.
Mr Robertson acknowledged that Unocal's shareholders would take the best offer but argued that Chevron's lower bid, about Dollars 16.5bn in cash and stock, remained superior overall, because it could be completed sooner with no risk of regulatory delay or security concerns.
Other US companies including ExxonMobil, as well as some pundits and politicians, have objected to suggestions that CNOOC's bid should be blocked, for fear that US interests could face retaliatory action.
But Mr Robertson said: "There is a government issue and a trade issue, and a fair trade issue, and I think Exxon and all the others stand up for fair trade and for free trade. We all do.
"In this case, some people are missing the fairness issue."
He repeated that Chevron saw no reason to raise its offer to match CNOOC's. "We think we offer the best deal to the Unocal shareholders," he said.
Additional reporting by Edward Alden in Washington Unocal alternatives, Page 21 www.ft.com/unocal
LOAD-DATE: June 30, 2005
July 1, 2005 Friday
USA Edition 1
SECTION: FRONT PAGE - FIRST SECTION; Pg. 1
LENGTH: 472 words
HEADLINE: Chevron raises stakes in Unocal fight with call for CNOOC bid to go to WTO
BYLINE: By EDWARD ALDEN and SHEILA MCNULTY
DATELINE: HOUSTON and WASHINGTON
BODY:
Chevron yesterday called for China National Offshore Oil Corporation's unsolicited bid for Unocal to be referred to the World Trade Organisation, claiming its Asian rival was attempting to acquire a "critical resource" with "free money".
In an interview with the Financial Times, Peter Robertson, Chevron's vice-chairman, said: "There is something a little wrong with a set of trading rules that allow a government to enter a commercial playing field, in a sense, and to subsidise a bid to pick up these assets.
"If you can get free money, there is no end to this. So it seems like there is sort of a trade rules issue here that somebody needs to deal with."
Chevron claims CNOOC's Dollars 18.5bn bid for Unocal is subsidised by as much as Dollars 10 a Unocal share because of the low- or no- interest finance provided by the Chinese government. Chevron's view, Mr Robertson said, was that if China could buy "a critical resource like energy with free money, then that's not a commercial transaction at all".
CNOOC maintains its offer is purely commercial.
Mr Robertson added: "I think the country - whether it's the US or the UK or any country - ought to take a hard look at that. I think WTO rules are intended to make sure that doesn't happen."
While there is scant prospect of the issue reaching the WTO - the multilateral body has no provisions on cross-border mergers or competition policy, and weak rules on investment - Chevron's comments are likely to raise the temperature in Washington.
Congress and the Bush administration are under pressure to approve legislation that would allow US companies to use domestic anti-subsidy laws against Chinese rivals. Currently those laws - which allow for the imposition of import tariffs - offer no help because China is deemed by the US to be a "non-market economy" in which state support of private companies is ubiquitous.
Mr Robertson acknowledged that Unocal's shareholders would take the best offer but argued that Chevron's lower bid, about Dollars 16.5bn in cash and stock, remained superior overall, because it could be completed sooner with no risk of regulatory delay or security concerns.
Other US companies including ExxonMobil, as well as some pundits and politicians, have objected to suggestions that CNOOC's bid should be blocked, for fear that US interests could face retaliatory action.
But Mr Robertson said: "There is a government issue and a trade issue, and a fair trade issue, and I think Exxon and all the others stand up for fair trade and for free trade. We all do.
"In this case, some people are missing the fairness issue."
He repeated that Chevron saw no reason to raise its offer to match CNOOC's. "We think we offer the best deal to the Unocal shareholders," he said.
Additional reporting by Edward Alden in Washington Unocal alternatives, Page 21 www.ft.com/unocal
LOAD-DATE: June 30, 2005
wsj CNOOC
Cnooc's Miscalculation
By J. Robinson West
1,058 words
15 July 2005
The Asian Wall Street Journal
A9
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
The bid by the Chinese National Offshore Oil Company (Cnooc) for Unocal has caused political combustion in Washington. A careful examination of the facts may clear the air. The rise of China is a transformational event in the international oil industry. Its growing economy has created a surging demand for oil. Cnooc is a state enterprise with the clear purpose to further the interests of the Chinese state, including increasing its energy security.
Cnooc and its sister National Oil Companies (NOCs), PetroChina and Sinopec are moving aggressively to acquire reserves and production outside China, with only modest successes to date. They are actively competing against international oil companies (IOCs) and also trying to negotiate directly with governments. Chinese companies are also prepared to enter areas which are either highly risky or otherwise unattractive to IOCs such as Sudan or Iran.
Since they are coming late to the game, Chinese companies use whatever political or financial tools are available to compete. In Angola, for example, a large Chinese government loan package helped obtain oil licenses. In Australia, Cnooc used its government ties to force its way into the Gorgon LNG project in Western Australia in exchange for access to the domestic gas market in mainland China.
Some argue that China should be allowed to invest in the U.S. because Westerners can invest in China. For international oil companies to invest there, however, they enter on terms dictated by the Chinese government. Foreigners do not demand expedited treatment from the government. The negotiations are excruciating and by no means reciprocal or transparent. Foreign companies can only obtain minority interests where Chinese state companies control the majority and are the operator. The Chinese want Western technology and know-how, particularly in project management. They seek to extract the maximum from international investors, and give back the minimum. These are not arms'-length commercial transactions; they are highly political.
The case is made that other NOCs such as Saudi Aramco and PDVSA of Venezuela invest in the U.S. and the Cnooc deal is the same. Not so. Aramco and PDVSA invested in refineries to assure markets for their crude oil in the U.S. The investments were on a friendly, uncontested basis, with no competing bids. The U.S. consumer clearly benefits from these downstream investments. The Cnooc investment is entirely different, since it brings no benefit to the U.S. consumer. Furthermore, due to the delay of the Cnooc bid, caused solely by Cnooc, they chose to enter into a contested bid, late. Now they seek expedited treatment to overcome delays initially imposed by themselves.
The financing of the transaction must be reviewed by the U.S. government. The Chinese government is providing low or no interest rate financing for $7 billion of the total financing of $18.5 billion; otherwise, Cnooc, with a market capitalization of $21.9 billion at the time of the bid could not possibly afford this offer. This financing is a breach of the spirit, if not the letter, of international rules on subsidies. It poses complicated issues that U.S. policy makers must address, namely, how should the U.S. government deal with state-owned enterprises -- which have the treasuries of their countries unfairly backing them -- when these companies start competing for assets outside their home market. All U.S. companies should be interested in how the U.S. government deals with this new and emerging challenge.
A fundamental rationale for this bid is that it would help the energy security of China. How? Should the bid by Cnooc be successful, then Cnooc will be much larger, a national champion, but it does nothing to assure more Asian oil and gas flowing to China. The gas reserves in Thailand and Myanmar will be delivered to the Thai market by pipeline. To build a pipeline from Thailand to China makes no sense, and local Thai demand will absorb all the production. Likewise, the substantial gas production of Unocal in Indonesia flows to the Bontang LNG plant and is then moved by ship to Korea, Japan and Taiwan. This gas is under contract through 2010. Pertamina, the Indonesian state company, will then market the gas after 2010. If China or Cnooc wants to get it, they must be the highest bidder. Being a reserve holder in Indonesia will give Cnooc little advantage in obtaining this gas.
The energy security of China is a very serious and legitimate issue which the U.S. should address on a cooperative, not competitive, basis. It is clear how the Cnooc-Unocal transaction would further the ambitions of China, but not its energy security. I would urge a more constructive approach than contested bids. China is clearly willing to provide substantial debt financing to further its energy program. This is amply demonstrated in its Unocal bid. Likewise, there are large petroleum provinces not open to investment by IOCs. These closed countries control 77% of the world's oil resources and include most of the Middle East and Mexico. The U.S. should encourage the Chinese to provide attractive debt financing of petroleum projects in these closed countries. The increased production from such investments could be integrated with China. Such investments would benefit China, and benefit the U.S., since it would result in more oil on world markets. This is a win-win situation for both nations, as well as for consumers world-wide.
The Cnooc bid should be seen for what it is -- an aggressive, contested bid filed late. Now the Chinese are demanding exceptions to the rules and sliding past uncomfortable facts. It is not a commercial deal, but rather a government deal financed with cheap government money. The Chinese cannot demand fairness on the one hand, but not play fair with the other. The Unocal deal is also an unfortunate distraction to the vital question of Chinese energy security. The U.S. should cooperate with China, not compete with it. There are ways this can be achieved which can increase not only the mutual energy supply but mutual trust as well. Washington should take this approach, and not be stampeded by Cnooc into an unfair deal.
---
Mr. West, a former assistant secretary of the Interior in the Reagan administration, is chairman of PFC Energy.
Document AWSJ000020050714e17f00024
Thursday, July 14, 2005
People's Daily Online -- China bans foreign participation in domestic TV channels
Home >> China
UPDATED: 20:37, July 13, 2005
China bans foreign participation in domestic TV channels
The Chinese State Administration of Radio, Film and Television (SARFT) Tuesday issued a regulation banning any cooperation in channel operation between local TV and radio stations and foreign companies, Wednesday's Beijing Morning Post reported.
The regulation stipulates that all local TV and radio stations should not rent their channels to foreign companies and also should not cooperate with foreign companies in running channels.
It also bans any cooperation with foreign companies in regular and live programs. Other kinds of cooperation with foreign companies should first be approved by the SARFT's provincial branches.
Four months ago, the SARFT issued a circular to make clear that foreign companies should not be involved in operating TV and radio channels, although it allowed foreign companies to set up joint ventures in TV, film and radio program production.
The regulation means that the government has tightened its control over the cooperation between Chinese media and foreign companies, said the paper.
It said that the Qinghai Satellite TV Station in western China had ceased its cooperation with the news corporation held by Rupert Murdock, which started early this year.
Source: Xinhua
People's Daily Online -- China bans foreign participation in domestic TV channels
UPDATED: 20:37, July 13, 2005
China bans foreign participation in domestic TV channels
The Chinese State Administration of Radio, Film and Television (SARFT) Tuesday issued a regulation banning any cooperation in channel operation between local TV and radio stations and foreign companies, Wednesday's Beijing Morning Post reported.
The regulation stipulates that all local TV and radio stations should not rent their channels to foreign companies and also should not cooperate with foreign companies in running channels.
It also bans any cooperation with foreign companies in regular and live programs. Other kinds of cooperation with foreign companies should first be approved by the SARFT's provincial branches.
Four months ago, the SARFT issued a circular to make clear that foreign companies should not be involved in operating TV and radio channels, although it allowed foreign companies to set up joint ventures in TV, film and radio program production.
The regulation means that the government has tightened its control over the cooperation between Chinese media and foreign companies, said the paper.
It said that the Qinghai Satellite TV Station in western China had ceased its cooperation with the news corporation held by Rupert Murdock, which started early this year.
Source: Xinhua
People's Daily Online -- China bans foreign participation in domestic TV channels
Wednesday, July 13, 2005
People's Daily Online -- China forges two-way opening-up pattern
People's Daily Online -- China forges two-way opening-up pattern
Home >> Business
UPDATED: 17:08, July 13, 2005
China forges two-way opening-up pattern
China has been enjoying a favorable trend in foreign fund utilization since the reform and opening up more than two decades ago, said Assistant Commerce Minister Chen Jian at a press conference held by the State Council Information Office on July 12.
According to Chen, by the end of May, China had approved accumulatively the establishment of 520,000-odd foreign-funded enterprises, with a contractual value of $1.1 trillion, of which $584.4 billion had been actually in place.
The "going global" efforts by domestic companies are also rewarded. By the end of 2004, China's non-financial foreign direct investment (FDI) had added up to $36.8 billion; the total turnover of contracted projects in foreign countries reached $114 billion with a contractual value of $156.3 billion; labor cooperation with foreign countries achieved a turnover of $30.8 billion, with a contractual value of $36.1 billion and a workforce of 3,190,000 people dispatched overseas.
Foreign funds spur economic leaps
--Nearly 450 out of "Top 500" investing in China
During the first five months of this year, China saw 16,437 foreign-funded enterprises newly settled in the country, with a contractual value up to $64.97 billion, up by 14.88 percent over the same period of the previous year and including $22.366 billion actually paid in.
There have been more than 190 countries and regions coming to invest in China, their business covering manufacturing, service, agriculture, infrastructure and many other sectors.
Nearly 450 out of the world "top 500" transnational companies have invested in China, more than 30 of them having set up regional headquarters here. The number of foreign-funded R&D institutions has exceeded 600. China's capability in attracting foreign funds has in recent years increasingly enhanced, with the structure and quality of foreign investments continuously improved.
The use of foreign funds contributed to China's economic leaps, said Chen. As a main part of the nation's open economy, foreign funded enterprises have in recent years played an increasing role in promoting economic advancement. In 2004, foreign investment in fixed assets accounted for 12 percent of the national total, their industrial added value takes up as high as 28 percent and their export volumes 57 percent of the national total. Foreign funded enterprises directly employs 24 million people, about 10 percent of the national non-agricultural labor force.
Keep foreign investment policies stable
--Preferential polices not against WTO rules
Talking about the income tax gap between domestic and foreign firms, Chen said that taxation, as an important regulatory means, must be used for the purpose of sound national economic development, which is also the starting point of the formulation and implementation of our foreign fund utilization policies. Giving a certain degree of preference to foreign-funded companies is not against the WTO principle of national treatment.
To attract foreign investment with preferential policies is a common practice of in the world, said Chen. Continuity and stability of these policies should be maintained before relatively stable, reliable substitute policies are worked out.
China will further improve investment environment, perfect related laws and regulations and maintain policy continuity, Chen noted. Foreign investments in high-tech and modern service industries as well as in modern agriculture are particularly encouraged. The focus is to lure transnational companies to shift manufacturing links and R&D institutions with higher technological potentials and added values to China, and to push forward their cooperation with home companies in terms of technological development, resources procurement and market expansion.
"Going global" campaign in full swing
--Contractual value rose 45 percent
From January to May this year, China's non-financial FDI reached $1.8 billion; foreign contracted projects scored a turnover of $6.6 billion, up 10 percent over the same period of the previous year; value of newly signed contracts stood at $9.1 billion, up 45 percent; turnover of labor cooperation with foreign counties reached $1.6 billion, up 12 percent, with an additional contractual value of $1.5 billion, up 28 percent; by the end of May, the nation had a labor force of 520,000 people working overseas. While bringing in foreign funds, the country has been actively helping its companies to "go global".
China's economic growth indeed brings higher resource consumption, said Chen. However, its investment in resource fields cannot be labeled a struggle with the world for resources. China has always based its growth on domestic supplies. It certainly needs a considerable amount of resources, but its reserves are also large. China's foreign cooperation in mining is meant to promote common development through market exchanges and mining exploration.
China will further strengthen its "going global" strategy by improving law-making and service system, enlarging enterprises' decision-making power for operating overseas and enhancing risk prevention system to build a two-way opening-up pattern featuring both "bringing in" and "going global".
By People's Daily Online
Home >> Business
UPDATED: 17:08, July 13, 2005
China forges two-way opening-up pattern
China has been enjoying a favorable trend in foreign fund utilization since the reform and opening up more than two decades ago, said Assistant Commerce Minister Chen Jian at a press conference held by the State Council Information Office on July 12.
According to Chen, by the end of May, China had approved accumulatively the establishment of 520,000-odd foreign-funded enterprises, with a contractual value of $1.1 trillion, of which $584.4 billion had been actually in place.
The "going global" efforts by domestic companies are also rewarded. By the end of 2004, China's non-financial foreign direct investment (FDI) had added up to $36.8 billion; the total turnover of contracted projects in foreign countries reached $114 billion with a contractual value of $156.3 billion; labor cooperation with foreign countries achieved a turnover of $30.8 billion, with a contractual value of $36.1 billion and a workforce of 3,190,000 people dispatched overseas.
Foreign funds spur economic leaps
--Nearly 450 out of "Top 500" investing in China
During the first five months of this year, China saw 16,437 foreign-funded enterprises newly settled in the country, with a contractual value up to $64.97 billion, up by 14.88 percent over the same period of the previous year and including $22.366 billion actually paid in.
There have been more than 190 countries and regions coming to invest in China, their business covering manufacturing, service, agriculture, infrastructure and many other sectors.
Nearly 450 out of the world "top 500" transnational companies have invested in China, more than 30 of them having set up regional headquarters here. The number of foreign-funded R&D institutions has exceeded 600. China's capability in attracting foreign funds has in recent years increasingly enhanced, with the structure and quality of foreign investments continuously improved.
The use of foreign funds contributed to China's economic leaps, said Chen. As a main part of the nation's open economy, foreign funded enterprises have in recent years played an increasing role in promoting economic advancement. In 2004, foreign investment in fixed assets accounted for 12 percent of the national total, their industrial added value takes up as high as 28 percent and their export volumes 57 percent of the national total. Foreign funded enterprises directly employs 24 million people, about 10 percent of the national non-agricultural labor force.
Keep foreign investment policies stable
--Preferential polices not against WTO rules
Talking about the income tax gap between domestic and foreign firms, Chen said that taxation, as an important regulatory means, must be used for the purpose of sound national economic development, which is also the starting point of the formulation and implementation of our foreign fund utilization policies. Giving a certain degree of preference to foreign-funded companies is not against the WTO principle of national treatment.
To attract foreign investment with preferential policies is a common practice of in the world, said Chen. Continuity and stability of these policies should be maintained before relatively stable, reliable substitute policies are worked out.
China will further improve investment environment, perfect related laws and regulations and maintain policy continuity, Chen noted. Foreign investments in high-tech and modern service industries as well as in modern agriculture are particularly encouraged. The focus is to lure transnational companies to shift manufacturing links and R&D institutions with higher technological potentials and added values to China, and to push forward their cooperation with home companies in terms of technological development, resources procurement and market expansion.
"Going global" campaign in full swing
--Contractual value rose 45 percent
From January to May this year, China's non-financial FDI reached $1.8 billion; foreign contracted projects scored a turnover of $6.6 billion, up 10 percent over the same period of the previous year; value of newly signed contracts stood at $9.1 billion, up 45 percent; turnover of labor cooperation with foreign counties reached $1.6 billion, up 12 percent, with an additional contractual value of $1.5 billion, up 28 percent; by the end of May, the nation had a labor force of 520,000 people working overseas. While bringing in foreign funds, the country has been actively helping its companies to "go global".
China's economic growth indeed brings higher resource consumption, said Chen. However, its investment in resource fields cannot be labeled a struggle with the world for resources. China has always based its growth on domestic supplies. It certainly needs a considerable amount of resources, but its reserves are also large. China's foreign cooperation in mining is meant to promote common development through market exchanges and mining exploration.
China will further strengthen its "going global" strategy by improving law-making and service system, enlarging enterprises' decision-making power for operating overseas and enhancing risk prevention system to build a two-way opening-up pattern featuring both "bringing in" and "going global".
By People's Daily Online
Big Shift in China's Oil Policy
Big Shift in China's Oil Policy
Big Shift in China's Oil Policy
With Iraq Deal Dissolved by War, Beijing Looks Elsewhere
By Peter S. Goodman
Washington Post Foreign Service
Wednesday, July 13, 2005; D01
SHANGHAI -- Until recently, China's view of the global energy map focused narrowly on the Middle East, which holds roughly two-thirds of the world's oil. Special attention was directed toward one well-supplied country: Iraq.
Through cultivation of Saddam Hussein's government, China sought to develop some of Iraq's more promising reserves. Beijing advocated lifting the United Nations sanctions that prevented investment in Iraq's oil patch and limited sales of its production.
Then the United States went to war in Iraq in 2003, wiping out China's stakes. The war and its aftermath have reshaped China's basic conception of the geopolitics of oil and added urgency to its mission to lessen dependence on Middle East supplies. It has reinforced China's fears that it is locked in a zero-sum contest for energy with the world's lone superpower, prompting Beijing to intensify its search for new sources, international relations and energy experts say.
As a vocal camp in Congress recoils at the prospect of a Chinese state-owned company, Cnooc Ltd., taking control of the California-based Unocal Corp., the Bush administration's decision to wage the war in Iraq stands out as a crucial factor in explaining how China came to scour the earth for energy and why the effort is likely to remain central to U.S.-Chinese relations for some time, those analysts say.
"Iraq changed the government's thinking," said Pan Rui, an international relations expert at Fudan University in Shanghai. "The Middle East is China's largest source of oil. America is now pursuing a grand strategy, the pursuit of American hegemony in the Middle East. Saudi Arabia is the number one oil producer, and Iraq is number two [in terms of reserves]. Now, the United States has direct influence in both countries."
Many other factors help explain China's motives in dispatching its energy companies abroad for new stocks. Oil demand is exploding in China as people embrace automobiles and as factories, apartment towers and office buildings proliferate. For the third summer in a row, China is rationing energy, limiting production in industrial areas.
In little more than a decade, China has changed from a net exporter of oil into the world's second-largest importer, trailing only the United States.
Concern is mounting about future prospects for China's domestic oil production, which supplies about two-thirds of the country's crude oil needs. China's government estimates that it will need 600 million tons of crude oil a year by 2020, more than triple its expected output. Worldwide, the best oil fields are already claimed.
For the United States, Europe and Japan, the oil shocks of the 1970s supplied the lessons that have shaped their thinking about energy. China is a latecomer to the vagaries of the global energy business. It is grappling with how to manage dramatic growth and soaring demand for energy at the same time it confronts the implications of interventionist U.S. foreign policy.
"Many people argue that oil interests are the driving force behind the Iraq war," said Zhu Feng, a security expert at Beijing University. "For China, it has been a reminder and a warning about how geopolitical changes can affect its own energy interests. So China has decided to focus much more intently to address its security."
Throughout China's modern history, and particularly under Communist Party rule, the country's leaders have sought self-sufficiency -- a drive fueled by nationalist pride and the experience of colonialism, which fed notions that the outside world wants to prevent China's rise as a great power.
Under the rule of Mao Zedong, China -- under the banner of fending for itself -- focused on oil production in its northeast, near the city of Daqing. The government's current push to secure foreign oil fields is driven by worries that there may one day be too little oil to meet worldwide demand and that foreign powers -- in particular the United States -- will choke China.
"If the world oil stocks were exceeded by growth, who would provide energy to China?" said Shen Dingli, an international relations expert at Fudan University, who advises the government on security policy. "America would protect its own energy supply. The U.S. is China's major competitor."
Such fears involve Taiwan, the self-governing island claimed by China. The United States has pledged to help Taiwan should China attack. Officials in Beijing envision being cut off from energy supplies by the U.S. Navy in the event of war.
Many energy experts say owning oil fields provides no real energy security. It does not cushion against a rising cost of energy because no one country is large enough to determine the market price. Neither does it ensure access, because getting oil where it is needed depends largely upon shipping lanes policed by the U.S. Navy.
"There's an illusion that ownership ensures either volume or price," said William H. Overholt, director of the Rand Center for Asia-Pacific Policy in Santa Monica, Calif. "Oil is an internationally traded commodity. The key is having secure lines of supply from the Middle East."
Even the chairman of Cnooc asserted in an interview that buying foreign oil fields would give China additional security, dismissing the notion that anything other than commercial interest motivates his company's $18.5 billion bid for Unocal.
"In today's world, as long as you have money, you can buy oil from anywhere," Fu Chengyu said.
Fu maintained that Cnooc's interest in Unocal is purely commercial. The Chinese company is eager to have Unocal's substantial oil and gas reserves in Southeast Asia to help feed the liquid-natural-gas terminals it is developing in coastal China.
For China's leaders, however, buying foreign oil and gas fields in the name of energy security has become a central mission. Throughout the 1990s, China made deals to lock in long-term supplies and buy installations from Africa to Latin America. In 2002, Cnooc became the largest offshore oil producer in Indonesia when it bought a field from the Spanish firm Repsol YPF SA.
The Iraq war substantially intensified the foreign push. Most immediately, it destroyed China's hopes of developing large assets in Iraq. China had been waiting for the end of sanctions to begin work on the Al-Ahdab field in central Iraq, under a $1.3 billion contract signed in 1997 by its largest state-owned firm, China National Petroleum Corp. The field's production potential has been estimated at 90,000 barrels a day. China was also pursuing rights to a far bigger prize -- the Halfayah field, which could produce 300,000 barrels a day. Together, those two fields might have delivered quantities equivalent to 13 percent of China's current domestic production.
But the larger impact of the war was on China's understanding of the rules of the global energy game.
"The turning point in China's energy strategy was the Iraq war," said Tong Lixia, an energy expert at the Chinese Academy of International Trade and Economic Cooperation, which is affiliated with China's Commerce Ministry. "After 2003, both the companies and the government realized China could not rely on one or two oil production areas. It's too risky."
This year, China began work on a strategic oil reserve in coastal Zhejiang province that would allow the country to operate without imports for as long as three months. But the biggest emphasis has been on securing new stocks abroad, particularly in neighboring countries such as Kazakhstan and Russia, to limit dependence on shipping lanes.
China National Petroleum Corp. led the way. Since 2003, the company has signed 20 contracts to explore or purchase production facilities in 12 countries, including Peru, Tunisia, Azerbaijan and Mauritania. In 2004, the company's production of natural gas at overseas facilities nearly doubled from the previous year. Its overseas oil production climbed by a fifth.
Late last year, President Hu Jintao said Chinese companies would invest $5 billion in oil projects in Argentina.
So far, however, China's foreign campaign has delivered more lessons in the difficulties of the energy business than energy itself. In June 2003, Beijing hailed a $150 billion agreement with Russia to tap fields in Siberia and send the oil through a new pipeline to China. The project was to supply as much as one-third of China's needed imports by 2030. But that deal appeared to disintegrate when the Russian signatory, Yukos Oil Co., fell into disarray last year after its chief founder was jailed on tax-evasion charges. Japan appears poised to capture the Siberian oil with a promise of at least $6 billion to develop the fields, though recent indications are that Beijing is putting together an even more generous package to bring the project back, according to an adviser to the government.
With so much competition for assets, China has pursued deals with international pariah states that are off-limits to Western oil companies because of sanctions, security concerns or the threat of bad publicity. China National Petroleum is the largest shareholder in a consortium running much of the oil patch in Sudan, a country accused by the United States of genocide in its western region of Darfur. Last year, China signed a $70 billion oil and gas purchase agreement with Iran, undercutting efforts by the United States and Europe to isolate Teheran and force it to give up plans for nuclear weapons. If Cnooc acquires Unocal, it would have gas fields and a pipeline in Burma, whose operation by the U.S. company has been criticized by human-rights groups.
"No matter if it's rogue's oil or a friend's oil, we don't care," said an energy adviser to the central government who spoke on the condition he not be identified, citing the threat of government disciplinary action. "Human rights? We don't care. We care about oil. Whether Iran would have nuclear weapons or not is not our business. America cares, but Iran is not our neighbor. Anyone who helps China with energy is a friend."
Special correspondents Eva Woo and Jason Cai contributed to this report.
© 2005 The Washington Post Company
Big Shift in China's Oil Policy
With Iraq Deal Dissolved by War, Beijing Looks Elsewhere
By Peter S. Goodman
Washington Post Foreign Service
Wednesday, July 13, 2005; D01
SHANGHAI -- Until recently, China's view of the global energy map focused narrowly on the Middle East, which holds roughly two-thirds of the world's oil. Special attention was directed toward one well-supplied country: Iraq.
Through cultivation of Saddam Hussein's government, China sought to develop some of Iraq's more promising reserves. Beijing advocated lifting the United Nations sanctions that prevented investment in Iraq's oil patch and limited sales of its production.
Then the United States went to war in Iraq in 2003, wiping out China's stakes. The war and its aftermath have reshaped China's basic conception of the geopolitics of oil and added urgency to its mission to lessen dependence on Middle East supplies. It has reinforced China's fears that it is locked in a zero-sum contest for energy with the world's lone superpower, prompting Beijing to intensify its search for new sources, international relations and energy experts say.
As a vocal camp in Congress recoils at the prospect of a Chinese state-owned company, Cnooc Ltd., taking control of the California-based Unocal Corp., the Bush administration's decision to wage the war in Iraq stands out as a crucial factor in explaining how China came to scour the earth for energy and why the effort is likely to remain central to U.S.-Chinese relations for some time, those analysts say.
"Iraq changed the government's thinking," said Pan Rui, an international relations expert at Fudan University in Shanghai. "The Middle East is China's largest source of oil. America is now pursuing a grand strategy, the pursuit of American hegemony in the Middle East. Saudi Arabia is the number one oil producer, and Iraq is number two [in terms of reserves]. Now, the United States has direct influence in both countries."
Many other factors help explain China's motives in dispatching its energy companies abroad for new stocks. Oil demand is exploding in China as people embrace automobiles and as factories, apartment towers and office buildings proliferate. For the third summer in a row, China is rationing energy, limiting production in industrial areas.
In little more than a decade, China has changed from a net exporter of oil into the world's second-largest importer, trailing only the United States.
Concern is mounting about future prospects for China's domestic oil production, which supplies about two-thirds of the country's crude oil needs. China's government estimates that it will need 600 million tons of crude oil a year by 2020, more than triple its expected output. Worldwide, the best oil fields are already claimed.
For the United States, Europe and Japan, the oil shocks of the 1970s supplied the lessons that have shaped their thinking about energy. China is a latecomer to the vagaries of the global energy business. It is grappling with how to manage dramatic growth and soaring demand for energy at the same time it confronts the implications of interventionist U.S. foreign policy.
"Many people argue that oil interests are the driving force behind the Iraq war," said Zhu Feng, a security expert at Beijing University. "For China, it has been a reminder and a warning about how geopolitical changes can affect its own energy interests. So China has decided to focus much more intently to address its security."
Throughout China's modern history, and particularly under Communist Party rule, the country's leaders have sought self-sufficiency -- a drive fueled by nationalist pride and the experience of colonialism, which fed notions that the outside world wants to prevent China's rise as a great power.
Under the rule of Mao Zedong, China -- under the banner of fending for itself -- focused on oil production in its northeast, near the city of Daqing. The government's current push to secure foreign oil fields is driven by worries that there may one day be too little oil to meet worldwide demand and that foreign powers -- in particular the United States -- will choke China.
"If the world oil stocks were exceeded by growth, who would provide energy to China?" said Shen Dingli, an international relations expert at Fudan University, who advises the government on security policy. "America would protect its own energy supply. The U.S. is China's major competitor."
Such fears involve Taiwan, the self-governing island claimed by China. The United States has pledged to help Taiwan should China attack. Officials in Beijing envision being cut off from energy supplies by the U.S. Navy in the event of war.
Many energy experts say owning oil fields provides no real energy security. It does not cushion against a rising cost of energy because no one country is large enough to determine the market price. Neither does it ensure access, because getting oil where it is needed depends largely upon shipping lanes policed by the U.S. Navy.
"There's an illusion that ownership ensures either volume or price," said William H. Overholt, director of the Rand Center for Asia-Pacific Policy in Santa Monica, Calif. "Oil is an internationally traded commodity. The key is having secure lines of supply from the Middle East."
Even the chairman of Cnooc asserted in an interview that buying foreign oil fields would give China additional security, dismissing the notion that anything other than commercial interest motivates his company's $18.5 billion bid for Unocal.
"In today's world, as long as you have money, you can buy oil from anywhere," Fu Chengyu said.
Fu maintained that Cnooc's interest in Unocal is purely commercial. The Chinese company is eager to have Unocal's substantial oil and gas reserves in Southeast Asia to help feed the liquid-natural-gas terminals it is developing in coastal China.
For China's leaders, however, buying foreign oil and gas fields in the name of energy security has become a central mission. Throughout the 1990s, China made deals to lock in long-term supplies and buy installations from Africa to Latin America. In 2002, Cnooc became the largest offshore oil producer in Indonesia when it bought a field from the Spanish firm Repsol YPF SA.
The Iraq war substantially intensified the foreign push. Most immediately, it destroyed China's hopes of developing large assets in Iraq. China had been waiting for the end of sanctions to begin work on the Al-Ahdab field in central Iraq, under a $1.3 billion contract signed in 1997 by its largest state-owned firm, China National Petroleum Corp. The field's production potential has been estimated at 90,000 barrels a day. China was also pursuing rights to a far bigger prize -- the Halfayah field, which could produce 300,000 barrels a day. Together, those two fields might have delivered quantities equivalent to 13 percent of China's current domestic production.
But the larger impact of the war was on China's understanding of the rules of the global energy game.
"The turning point in China's energy strategy was the Iraq war," said Tong Lixia, an energy expert at the Chinese Academy of International Trade and Economic Cooperation, which is affiliated with China's Commerce Ministry. "After 2003, both the companies and the government realized China could not rely on one or two oil production areas. It's too risky."
This year, China began work on a strategic oil reserve in coastal Zhejiang province that would allow the country to operate without imports for as long as three months. But the biggest emphasis has been on securing new stocks abroad, particularly in neighboring countries such as Kazakhstan and Russia, to limit dependence on shipping lanes.
China National Petroleum Corp. led the way. Since 2003, the company has signed 20 contracts to explore or purchase production facilities in 12 countries, including Peru, Tunisia, Azerbaijan and Mauritania. In 2004, the company's production of natural gas at overseas facilities nearly doubled from the previous year. Its overseas oil production climbed by a fifth.
Late last year, President Hu Jintao said Chinese companies would invest $5 billion in oil projects in Argentina.
So far, however, China's foreign campaign has delivered more lessons in the difficulties of the energy business than energy itself. In June 2003, Beijing hailed a $150 billion agreement with Russia to tap fields in Siberia and send the oil through a new pipeline to China. The project was to supply as much as one-third of China's needed imports by 2030. But that deal appeared to disintegrate when the Russian signatory, Yukos Oil Co., fell into disarray last year after its chief founder was jailed on tax-evasion charges. Japan appears poised to capture the Siberian oil with a promise of at least $6 billion to develop the fields, though recent indications are that Beijing is putting together an even more generous package to bring the project back, according to an adviser to the government.
With so much competition for assets, China has pursued deals with international pariah states that are off-limits to Western oil companies because of sanctions, security concerns or the threat of bad publicity. China National Petroleum is the largest shareholder in a consortium running much of the oil patch in Sudan, a country accused by the United States of genocide in its western region of Darfur. Last year, China signed a $70 billion oil and gas purchase agreement with Iran, undercutting efforts by the United States and Europe to isolate Teheran and force it to give up plans for nuclear weapons. If Cnooc acquires Unocal, it would have gas fields and a pipeline in Burma, whose operation by the U.S. company has been criticized by human-rights groups.
"No matter if it's rogue's oil or a friend's oil, we don't care," said an energy adviser to the central government who spoke on the condition he not be identified, citing the threat of government disciplinary action. "Human rights? We don't care. We care about oil. Whether Iran would have nuclear weapons or not is not our business. America cares, but Iran is not our neighbor. Anyone who helps China with energy is a friend."
Special correspondents Eva Woo and Jason Cai contributed to this report.
© 2005 The Washington Post Company
Bloomberg.com: U.S.
Bloomberg.com: U.S. Print
Cnooc's Unocal Offer Threatens U.S., Witness to Say (Update2) Listen
July 13 (Bloomberg) -- Cnooc Ltd.'s $18.5 billion bid for Unocal Corp. is an ``ominous'' move by China to dominate energy resources for the benefit of its economy and military, Frank Gaffney of the Center for Security Policy plans to tell Congress.
Gaffney is scheduled to appear today before a House Armed Services Committee hearing, the latest sign of the opposition Cnooc faces in Congress as it tries to get Unocal's board and shareholders to abandon a lower offer from Chevron Corp., the second-biggest U.S. oil company. Cnooc is 70 percent owned by state-controlled China National Offshore Oil Corp.
Objections in Congress favor Chevron, which has all the government approvals for the merger and would complete the transaction soon after Unocal shareholders approve it. The company has said the higher price from Cnooc is outweighed by uncertainty over when the deal would get done. Cnooc has countered that it can allay any concerns in a government review.
Congress has been too quick to judge the Chinese bid, said William Reinsch, president of the National Foreign Trade Council. ``It would be nice if everybody would just step back, calm down,'' Reinsch said in an interview July 11. ``The shareholders are the key element here. Let them vote, and then let's see what we've got.''
Representative Joe Barton of Texas, chair of the House Energy Committee, also plans a hearing, on July 19. A resolution passed by the House says a Chinese buyer for a U.S. energy company may threaten national security and ``the nation's economic prosperity.''
Vote
Unocal shareholders are scheduled to vote Aug. 10 on Chevron's cash-and-stock offer, worth $60.68 a share, or about $16.5 billion, as of yesterday. Unocal's board agreed to Chevron's acquisition April 4. Cnooc bid $67 a share on June 23. Unocal has said its approval of the acquisition by Chevron stands and that Cnooc's offer is being examined.
Cnooc's board is expected to meet today to consider raising the company's offer, the Financial Times reported, citing people familiar with the matter. Unocal's board is scheduled to meet July 14 to consider whether it will continue supporting Chevron's offer, the report said.
Cnooc's Chief Financial Officer Yang Hua declined to comment today on the FT report or the House Armed Services Committee hearing.
The U.S. should keep ``for our own use'' the oil and gas reserves owned by American companies, Gaffney said in prepared testimony. With demand for oil surging and prices at all-time highs, ``we will inevitably find ourselves on a collision course with Communist China.''
Gaffney, an assistant secretary of defense in the Reagan administration, is president of the Washington-based center. Vice President Dick Cheney is a former member of the research organization's board, according to its Web site.
Oil, Growth
Oil has doubled in the last two years, as economic growth in China, India and the U.S. lifted demand. Benchmark New York oil futures touched a record $62.10 a barrel last week and ended yesterday at $60.62.
Barton's views echo Gaffney's. ``U.S. strategic interests are not served by selling a U.S.-based oil company to a company that's 70 percent owned by the Chinese Communist government,'' Barton said in a statement, announcing his plans for a hearing later this month.
El Segundo, California-based Unocal has oil and natural gas reserves equivalent to about 1.75 billion barrels of oil, mostly in Southeast Asia, the Gulf of Mexico and the Caspian region. Almost two-thirds of the company's output last year was gas.
Acquiring Unocal would more than double Cnooc's oil and gas output. Fu Chengyu, chairman of Hong Kong-based Cnooc, is attempting China's biggest overseas takeover.
Coal, Oil, Gas
China, which relies on coal and oil for 90 percent of its fuel, wants cleaner-burning gas to account for 8 percent of the country's energy supply by 2010, up from about 3 percent now.
Cnooc has said it would submit to a U.S. government review of any Unocal acquisition. It has vowed to keep Unocal's U.S. output flowing to the domestic market.
The rival bidders for Unocal have joined the politicians' debate. Chevron, based in San Ramon, California, has said that $7 billion in loans from Cnooc's parent company are at below market rates and are an unfair government subsidy.
Chevron Chief Executive David O'Reilly wrote yesterday in the editorial pages of the Wall Street Journal that a Cnooc acquisition, ``would still face a complex and uncertain government review process.''
CNOOC, for its part, began an ad campaign today in newspapers such as Roll Call that circulate on Capitol Hill. One of the ads says the deal ``will keep oil in the U.S. and will protect American jobs.''
Supporters of a Cnooc bid point out that Unocal has the majority of its reserves outside the U.S., particularly in Asian countries such as Indonesia.
National Interest
``What happens to some gas field in Indonesia is really not too vital to the American national interest,'' said Amy Jaffe, an energy expert at the James A Baker III Institute for Public Policy at Rice University. ``What happens to U.S. companies trying to invest efficiently and effectively in energy assets around the world is incredibly important to us.''
Jerry Taylor, an analyst at the Cato Institute in Washington who is scheduled to appear with Gaffney at today's hearing, said Congress is wrong to imply that Chinese control of Unocal would harm U.S. interests in the global oil market.
``China's a net importer, not an exporter, so their interests are low oil prices,'' Taylor said in an interview yesterday. ``Their interests are the same as ours,'' he said. ``I simply don't see any conceivable scenario where U.S. national security is affected in any way by this.''
The resolution the House passed on June 22, by a vote of 398 to 15, says Cnooc has made no commitment to keep the oil Unocal produces outside of North America flowing to the global market, rather than ``shipping it directly to China.''
``I favor the bid that gives my client the most money,'' said Rodney Mitchell, who oversees $395 million as president of the Mitchell Group, a Houston money management firm with 500,000 Unocal shares. ``As an American, I obviously favor the Chevron bid,'' Mitchell said. Still, he said free trade will trump congressional objections in favor of Cnooc.
To contact the reporter on this story:
Jim Efstathiou Jr. in Washington at jefstathiou@bloomberg.net.
Last Updated: July 13, 2005 02:57 EDT
Cnooc's Unocal Offer Threatens U.S., Witness to Say (Update2) Listen
July 13 (Bloomberg) -- Cnooc Ltd.'s $18.5 billion bid for Unocal Corp. is an ``ominous'' move by China to dominate energy resources for the benefit of its economy and military, Frank Gaffney of the Center for Security Policy plans to tell Congress.
Gaffney is scheduled to appear today before a House Armed Services Committee hearing, the latest sign of the opposition Cnooc faces in Congress as it tries to get Unocal's board and shareholders to abandon a lower offer from Chevron Corp., the second-biggest U.S. oil company. Cnooc is 70 percent owned by state-controlled China National Offshore Oil Corp.
Objections in Congress favor Chevron, which has all the government approvals for the merger and would complete the transaction soon after Unocal shareholders approve it. The company has said the higher price from Cnooc is outweighed by uncertainty over when the deal would get done. Cnooc has countered that it can allay any concerns in a government review.
Congress has been too quick to judge the Chinese bid, said William Reinsch, president of the National Foreign Trade Council. ``It would be nice if everybody would just step back, calm down,'' Reinsch said in an interview July 11. ``The shareholders are the key element here. Let them vote, and then let's see what we've got.''
Representative Joe Barton of Texas, chair of the House Energy Committee, also plans a hearing, on July 19. A resolution passed by the House says a Chinese buyer for a U.S. energy company may threaten national security and ``the nation's economic prosperity.''
Vote
Unocal shareholders are scheduled to vote Aug. 10 on Chevron's cash-and-stock offer, worth $60.68 a share, or about $16.5 billion, as of yesterday. Unocal's board agreed to Chevron's acquisition April 4. Cnooc bid $67 a share on June 23. Unocal has said its approval of the acquisition by Chevron stands and that Cnooc's offer is being examined.
Cnooc's board is expected to meet today to consider raising the company's offer, the Financial Times reported, citing people familiar with the matter. Unocal's board is scheduled to meet July 14 to consider whether it will continue supporting Chevron's offer, the report said.
Cnooc's Chief Financial Officer Yang Hua declined to comment today on the FT report or the House Armed Services Committee hearing.
The U.S. should keep ``for our own use'' the oil and gas reserves owned by American companies, Gaffney said in prepared testimony. With demand for oil surging and prices at all-time highs, ``we will inevitably find ourselves on a collision course with Communist China.''
Gaffney, an assistant secretary of defense in the Reagan administration, is president of the Washington-based center. Vice President Dick Cheney is a former member of the research organization's board, according to its Web site.
Oil, Growth
Oil has doubled in the last two years, as economic growth in China, India and the U.S. lifted demand. Benchmark New York oil futures touched a record $62.10 a barrel last week and ended yesterday at $60.62.
Barton's views echo Gaffney's. ``U.S. strategic interests are not served by selling a U.S.-based oil company to a company that's 70 percent owned by the Chinese Communist government,'' Barton said in a statement, announcing his plans for a hearing later this month.
El Segundo, California-based Unocal has oil and natural gas reserves equivalent to about 1.75 billion barrels of oil, mostly in Southeast Asia, the Gulf of Mexico and the Caspian region. Almost two-thirds of the company's output last year was gas.
Acquiring Unocal would more than double Cnooc's oil and gas output. Fu Chengyu, chairman of Hong Kong-based Cnooc, is attempting China's biggest overseas takeover.
Coal, Oil, Gas
China, which relies on coal and oil for 90 percent of its fuel, wants cleaner-burning gas to account for 8 percent of the country's energy supply by 2010, up from about 3 percent now.
Cnooc has said it would submit to a U.S. government review of any Unocal acquisition. It has vowed to keep Unocal's U.S. output flowing to the domestic market.
The rival bidders for Unocal have joined the politicians' debate. Chevron, based in San Ramon, California, has said that $7 billion in loans from Cnooc's parent company are at below market rates and are an unfair government subsidy.
Chevron Chief Executive David O'Reilly wrote yesterday in the editorial pages of the Wall Street Journal that a Cnooc acquisition, ``would still face a complex and uncertain government review process.''
CNOOC, for its part, began an ad campaign today in newspapers such as Roll Call that circulate on Capitol Hill. One of the ads says the deal ``will keep oil in the U.S. and will protect American jobs.''
Supporters of a Cnooc bid point out that Unocal has the majority of its reserves outside the U.S., particularly in Asian countries such as Indonesia.
National Interest
``What happens to some gas field in Indonesia is really not too vital to the American national interest,'' said Amy Jaffe, an energy expert at the James A Baker III Institute for Public Policy at Rice University. ``What happens to U.S. companies trying to invest efficiently and effectively in energy assets around the world is incredibly important to us.''
Jerry Taylor, an analyst at the Cato Institute in Washington who is scheduled to appear with Gaffney at today's hearing, said Congress is wrong to imply that Chinese control of Unocal would harm U.S. interests in the global oil market.
``China's a net importer, not an exporter, so their interests are low oil prices,'' Taylor said in an interview yesterday. ``Their interests are the same as ours,'' he said. ``I simply don't see any conceivable scenario where U.S. national security is affected in any way by this.''
The resolution the House passed on June 22, by a vote of 398 to 15, says Cnooc has made no commitment to keep the oil Unocal produces outside of North America flowing to the global market, rather than ``shipping it directly to China.''
``I favor the bid that gives my client the most money,'' said Rodney Mitchell, who oversees $395 million as president of the Mitchell Group, a Houston money management firm with 500,000 Unocal shares. ``As an American, I obviously favor the Chevron bid,'' Mitchell said. Still, he said free trade will trump congressional objections in favor of Cnooc.
To contact the reporter on this story:
Jim Efstathiou Jr. in Washington at jefstathiou@bloomberg.net.
Last Updated: July 13, 2005 02:57 EDT
Unocal Bid Opens Up New Issues of Security - New York Times
July 13, 2005
Unocal Bid Opens Up New Issues of Security
By STEVE LOHR
The fate of the China National Offshore Oil Corporation's bid for Unocal remains uncertain, but one thing is clear. The takeover offer has prompted a gathering groundswell in Congress to make sure oil is defined as a product vital to America's national security.
If the political push gains momentum, it will change the mandate and reach of a little-known, secretive body with representatives from 12 government agencies, the Committee on Foreign Investment in the United States. The outcome of Cnooc's bid for Unocal may rest in the hands of that committee.
One salvo came at the end of last month with a House resolution that declared that permitting the Chinese company to buy Unocal would "threaten to impair the national security of the United States." It passed 398 to 15.
Now the members of a bipartisan advisory group to Congress are urging representatives and senators to amend the law that controls the work of the foreign investment committee. The Congressional advisory group wants the law to specifically expand the definition of America's national security to include matters of economic security, like energy and oil supplies.
"Is energy security national security? We certainly think it is," said C. Richard D'Amato, chairman of the United States-China Economic and Security Review Commission, which advises Congress.
Mr. D'Amato is scheduled to testify today at a House Armed Services Committee hearing on the national security implications of the Chinese company's pending bid for Unocal, a midsize American oil company.
The $18.5 billion bid by Cnooc competes with one from Chevron, which is lower at $16.8 billion. But the Chevron offer came before the Cnooc bid surfaced, and Cnooc faces regulatory and political hurdles that Chevron does not. The Unocal board has approved the Chevron offer, but is now talking with Cnooc as well.
To treat oil, a globally traded commodity, as a national security product would represent a departure for the Committee on Foreign Investment in the United States, known as Cfius (pronounced SIH-fee-us), created in 1988 to scrutinize foreign purchases of American companies for national security concerns. The committee, headed by the Treasury secretary, has representatives from 12 agencies including the State Department, Defense Department, Department of Homeland Security, Commerce Department, Office of the United States Trade Representative and National Security Council. Its proceedings are secret.
Over the years, in both Republican and Democratic administrations, the investment committee has typically focused on the potential of a foreign takeover to transfer military-related technologies used in arms like fighter jets, precision bombs and nuclear submarines.
The committee, according to foreign trade specialists and former government officials, routinely looks for so-called dual-use technologies that have advanced industrial and military applications. To satisfy those security concerns, mergers have often been modified - to spin off a small but sensitive operation, for example, or restrict access to a plant to American employees. In some cases, bidders drop their offers when confronted with the committee review and its conditions.
Of more than 1,500 filings to the committee in 17 years, only about a dozen cases, trade experts say, have gone through a 30-day preliminary inquiry and a 45-day investigation, and then been referred to the president with a recommendation to approve or block the deal. Only one deal has been blocked on national security grounds: the 1990 sale of a airplane parts maker based in Seattle, Mamco Manufacturing, to the China National Aero-Technology Import and Export Corporation.
A Cnooc-Unocal deal, trade and security analysts say, could raise some traditional national security concerns that the investment committee would want to investigate. For example, the analysts said that Unocal had underwater terrain-mapping technology used for offshore oil exploration that might also be useful in navigation for the Chinese military's growing fleet of submarines.
"There could be national security issues in the Cnooc deal, but locking up oil is not one of them," said Kenneth G. Lieberthal, a former senior official on the National Security Council in the Clinton administration, who is a China expert at the University of Michigan.
Many economists and oil specialists are skeptical that owning oil is vital to national security. Controlling the oil and gas reserves in the ground, they say, does not increase a nation's energy security as long as there is a deep worldwide market for buying it by the barrel or tanker.
But the national security concern raised by members of Congress, their advisers and some oil experts is that the petroleum market may be changing because of tight supplies, rapidly rising demand from fast-growing nations like China and India, and the increasing strategy among state-owned oil companies to control reserves.
As a result, they warn, less oil will be bought and sold on the free market, while more will be locked up by national interests.
"I'm generally a free-trader, but I do think that we need to understand our security differently," explained Larry M. Wortzel, a former military attaché to the American Embassy in Beijing and a member of the Congressional United States-China Economic and Security Review Commission.
Another member of the Congressional commission, Michael R. Wessel, said: "I think most people would agree that oil is a national security issue. What is still to be determined, of course, is what to do about it."
That would be a politically difficult call, if the Bush administration had to make one in the Cnooc case. Both the Chinese company and its critics in Congress have asked the foreign investment committee to review the Cnooc bid. The Chinese company made its lengthy voluntary filing to the committee on June 29.
"Everybody in Congress was calling for a national security review," observed Daniel L. Spiegel, a partner in the law firm Akin Gump Strauss Hauer & Feld, which represents Cnooc. "We heard the calls and we moved forward. We made the filing."
The Cnooc side has heard nothing yet from the investment committee, which has apparently not begun a review. Cnooc contends that delay favors Chevron, and its own bid is hardly "hypothetical," as Treasury Secretary John W. Snow termed the Cnooc offer.
The Treasury Department position is that an inquiry will not start until "the committee has made a determination that a transaction is likely to be successful," said Tony Fratto, a department spokesman.
In the past, the foreign investment committee has conducted reviews of unsolicited takeover bids. It did so in 1990 when BTR of Britain bid for Norton, a producer of industrial abrasives whose products were used to make aircraft parts and missile domes. Later, when Saint-Gobain of France joined the contest, the foreign investment committee conducted the two reviews simultaneously. Saint-Gobain eventually won with a higher bid, and President George H. W. Bush approved the sale.
The administration, foreign policy specialists say, wants to put off a decision on Cnooc if it can. The United States, they note, faces a series of thorny issues with China on other fronts. Washington wants Beijing to put pressure on North Korea in coming nuclear disarmament talks; the United States is pressing China to restrain its digital pirates, who illegally copy movies, software and other goods; and there are the continuing tensions over China's huge trade surplus with the United States, manufacturing jobs lost to China and Washington's call for China to loosen its fixed-rate currency policy.
"The Bush administration would rather see the Cnooc bid and the issues surrounding it just go away somehow," said Mr. Lieberthal of the University of Michigan. "The administration is not anxious to put another issue - a potentially negative one - on the U.S.-China agenda."
Copyright 2005 The New York Times Company Home Privacy Policy Search Corrections Unocal Bid Opens Up New Issues of Security - New York Times
Unocal Bid Opens Up New Issues of Security
By STEVE LOHR
The fate of the China National Offshore Oil Corporation's bid for Unocal remains uncertain, but one thing is clear. The takeover offer has prompted a gathering groundswell in Congress to make sure oil is defined as a product vital to America's national security.
If the political push gains momentum, it will change the mandate and reach of a little-known, secretive body with representatives from 12 government agencies, the Committee on Foreign Investment in the United States. The outcome of Cnooc's bid for Unocal may rest in the hands of that committee.
One salvo came at the end of last month with a House resolution that declared that permitting the Chinese company to buy Unocal would "threaten to impair the national security of the United States." It passed 398 to 15.
Now the members of a bipartisan advisory group to Congress are urging representatives and senators to amend the law that controls the work of the foreign investment committee. The Congressional advisory group wants the law to specifically expand the definition of America's national security to include matters of economic security, like energy and oil supplies.
"Is energy security national security? We certainly think it is," said C. Richard D'Amato, chairman of the United States-China Economic and Security Review Commission, which advises Congress.
Mr. D'Amato is scheduled to testify today at a House Armed Services Committee hearing on the national security implications of the Chinese company's pending bid for Unocal, a midsize American oil company.
The $18.5 billion bid by Cnooc competes with one from Chevron, which is lower at $16.8 billion. But the Chevron offer came before the Cnooc bid surfaced, and Cnooc faces regulatory and political hurdles that Chevron does not. The Unocal board has approved the Chevron offer, but is now talking with Cnooc as well.
To treat oil, a globally traded commodity, as a national security product would represent a departure for the Committee on Foreign Investment in the United States, known as Cfius (pronounced SIH-fee-us), created in 1988 to scrutinize foreign purchases of American companies for national security concerns. The committee, headed by the Treasury secretary, has representatives from 12 agencies including the State Department, Defense Department, Department of Homeland Security, Commerce Department, Office of the United States Trade Representative and National Security Council. Its proceedings are secret.
Over the years, in both Republican and Democratic administrations, the investment committee has typically focused on the potential of a foreign takeover to transfer military-related technologies used in arms like fighter jets, precision bombs and nuclear submarines.
The committee, according to foreign trade specialists and former government officials, routinely looks for so-called dual-use technologies that have advanced industrial and military applications. To satisfy those security concerns, mergers have often been modified - to spin off a small but sensitive operation, for example, or restrict access to a plant to American employees. In some cases, bidders drop their offers when confronted with the committee review and its conditions.
Of more than 1,500 filings to the committee in 17 years, only about a dozen cases, trade experts say, have gone through a 30-day preliminary inquiry and a 45-day investigation, and then been referred to the president with a recommendation to approve or block the deal. Only one deal has been blocked on national security grounds: the 1990 sale of a airplane parts maker based in Seattle, Mamco Manufacturing, to the China National Aero-Technology Import and Export Corporation.
A Cnooc-Unocal deal, trade and security analysts say, could raise some traditional national security concerns that the investment committee would want to investigate. For example, the analysts said that Unocal had underwater terrain-mapping technology used for offshore oil exploration that might also be useful in navigation for the Chinese military's growing fleet of submarines.
"There could be national security issues in the Cnooc deal, but locking up oil is not one of them," said Kenneth G. Lieberthal, a former senior official on the National Security Council in the Clinton administration, who is a China expert at the University of Michigan.
Many economists and oil specialists are skeptical that owning oil is vital to national security. Controlling the oil and gas reserves in the ground, they say, does not increase a nation's energy security as long as there is a deep worldwide market for buying it by the barrel or tanker.
But the national security concern raised by members of Congress, their advisers and some oil experts is that the petroleum market may be changing because of tight supplies, rapidly rising demand from fast-growing nations like China and India, and the increasing strategy among state-owned oil companies to control reserves.
As a result, they warn, less oil will be bought and sold on the free market, while more will be locked up by national interests.
"I'm generally a free-trader, but I do think that we need to understand our security differently," explained Larry M. Wortzel, a former military attaché to the American Embassy in Beijing and a member of the Congressional United States-China Economic and Security Review Commission.
Another member of the Congressional commission, Michael R. Wessel, said: "I think most people would agree that oil is a national security issue. What is still to be determined, of course, is what to do about it."
That would be a politically difficult call, if the Bush administration had to make one in the Cnooc case. Both the Chinese company and its critics in Congress have asked the foreign investment committee to review the Cnooc bid. The Chinese company made its lengthy voluntary filing to the committee on June 29.
"Everybody in Congress was calling for a national security review," observed Daniel L. Spiegel, a partner in the law firm Akin Gump Strauss Hauer & Feld, which represents Cnooc. "We heard the calls and we moved forward. We made the filing."
The Cnooc side has heard nothing yet from the investment committee, which has apparently not begun a review. Cnooc contends that delay favors Chevron, and its own bid is hardly "hypothetical," as Treasury Secretary John W. Snow termed the Cnooc offer.
The Treasury Department position is that an inquiry will not start until "the committee has made a determination that a transaction is likely to be successful," said Tony Fratto, a department spokesman.
In the past, the foreign investment committee has conducted reviews of unsolicited takeover bids. It did so in 1990 when BTR of Britain bid for Norton, a producer of industrial abrasives whose products were used to make aircraft parts and missile domes. Later, when Saint-Gobain of France joined the contest, the foreign investment committee conducted the two reviews simultaneously. Saint-Gobain eventually won with a higher bid, and President George H. W. Bush approved the sale.
The administration, foreign policy specialists say, wants to put off a decision on Cnooc if it can. The United States, they note, faces a series of thorny issues with China on other fronts. Washington wants Beijing to put pressure on North Korea in coming nuclear disarmament talks; the United States is pressing China to restrain its digital pirates, who illegally copy movies, software and other goods; and there are the continuing tensions over China's huge trade surplus with the United States, manufacturing jobs lost to China and Washington's call for China to loosen its fixed-rate currency policy.
"The Bush administration would rather see the Cnooc bid and the issues surrounding it just go away somehow," said Mr. Lieberthal of the University of Michigan. "The administration is not anxious to put another issue - a potentially negative one - on the U.S.-China agenda."
Copyright 2005 The New York Times Company Home Privacy Policy Search Corrections Unocal Bid Opens Up New Issues of Security - New York Times
Tuesday, July 12, 2005
State Subsidies Have No Place in M&A Transactions
By David O'Reilly
749 words
12 July 2005
The Asian Wall Street Journal
A9
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
An unsolicited eleventh hour bid by the China National Offshore Oil Corporation (Cnooc) to buy Unocal -- attempting to break up a merger agreement that Unocal signed with Chevron three months ago -- has generated an extraordinary amount of public interest. As the Chevron-Unocal agreement nears an Aug. 10 vote by Unocal shareholders, we think it's important to focus on two critically important issues.
For Unocal shareholders, the most important issue is clear. It is a choice between a definitive merger agreement with Chevron, which can close in the next four weeks, versus an uncertain and highly contingent proposal from Cnooc, which cannot be executed unless and until Unocal shareholders reject the Chevron agreement, or Chevron opts out.
Even if Cnooc were to ultimately enter into a firm agreement with Unocal, it would still face a complex and uncertain government review process, including Congressional hearings and inquiries by four state attorneys general that will focus on antitrust, national-security, pension, environmental and fair-trade issues. Chevron, by contrast, has already cleared all the necessary regulatory hurdles.
In addition to the certainty and security that we offer to Unocal shareholders, our merger agreement is compelling for a number of other reasons. Chevron's offer of stock and cash presents Unocal shareholders with a competitive price, significant tax advantages and long-term investment value; Unocal's assets are a seamless strategic fit with Chevron's assets in Asia, the Caspian and the U.S. Gulf of Mexico; Chevron has a proven track record of performance and will be able to use its financial and technological resources to realize the full value of Unocal's assets, bringing more energy to U.S. and global markets; and there is a strong cultural affinity between our two companies, which both have deep roots in California's oil patch.
The second critical issue is in the arena of public policy. For the U.S. government, the proposal by Cnooc presents fundamental questions about fair trade that have profound implications for all U.S. businesses. Contrary to claims by Cnooc, the company's offer is simply not a commercial transaction. The company is 70% owned by the Chinese government and is relying on large subsidies in the form of government loans at below-market rates to finance its $18.5 billion offer. A conservative analysis shows that the value of these subsidies is at least $2.6 billion or $10 per Unocal share. These terms are simply not available to commercial companies operating in the open market. If Cnooc were to finance its offer on truly commercial terms available to most non-government owned corporations, as Chevron is, it simply couldn't make a competitive bid.
As one of the U.S.'s largest overseas investors, Chevron enthusiastically supports the principles of free and open trade. But, just as important, we think trade should also be fair, and conducted on a level playing field. Government subsidies, regardless of what country offers them, have no legitimate place in competitive M&A transactions. They distort markets, put commercial enterprises at a disadvantage, and disenfranchise investors in companies that don't benefit from subsidies.
The fact is that the Cnooc bid is precedent-setting and it is entirely appropriate for the U.S. government to carefully consider its implications. We respect that process and believe that it should be allowed to take its full course. In light of the review process, a central question for Unocal shareholders is whether they are comfortable with a bid for their company also being a test case for the broader global trade and investment issues that Cnooc's proposal has raised.
It is a paradox of today's global marketplace that sometimes our partners can also be our competitors. We have strong partnerships with Cnooc on several large energy projects. Chevron predecessors began doing business in China nearly 100 years ago and we continue to have significant business interests in China today. We expect to continue our relationship with China and Chinese enterprises for years to come -- as a strategic partner and an honorable competitor.
In the meantime, we're confident that Unocal shareholders, while appreciating the complexities of these issues, will see clearly through to the bottom line and endorse the strong and certain value presented by the merger agreement with Chevron.
---
Mr. O'Reilly is Chairman and CEO of Chevron.
Document AWSJ000020050711e17c0000k
By David O'Reilly
749 words
12 July 2005
The Asian Wall Street Journal
A9
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
An unsolicited eleventh hour bid by the China National Offshore Oil Corporation (Cnooc) to buy Unocal -- attempting to break up a merger agreement that Unocal signed with Chevron three months ago -- has generated an extraordinary amount of public interest. As the Chevron-Unocal agreement nears an Aug. 10 vote by Unocal shareholders, we think it's important to focus on two critically important issues.
For Unocal shareholders, the most important issue is clear. It is a choice between a definitive merger agreement with Chevron, which can close in the next four weeks, versus an uncertain and highly contingent proposal from Cnooc, which cannot be executed unless and until Unocal shareholders reject the Chevron agreement, or Chevron opts out.
Even if Cnooc were to ultimately enter into a firm agreement with Unocal, it would still face a complex and uncertain government review process, including Congressional hearings and inquiries by four state attorneys general that will focus on antitrust, national-security, pension, environmental and fair-trade issues. Chevron, by contrast, has already cleared all the necessary regulatory hurdles.
In addition to the certainty and security that we offer to Unocal shareholders, our merger agreement is compelling for a number of other reasons. Chevron's offer of stock and cash presents Unocal shareholders with a competitive price, significant tax advantages and long-term investment value; Unocal's assets are a seamless strategic fit with Chevron's assets in Asia, the Caspian and the U.S. Gulf of Mexico; Chevron has a proven track record of performance and will be able to use its financial and technological resources to realize the full value of Unocal's assets, bringing more energy to U.S. and global markets; and there is a strong cultural affinity between our two companies, which both have deep roots in California's oil patch.
The second critical issue is in the arena of public policy. For the U.S. government, the proposal by Cnooc presents fundamental questions about fair trade that have profound implications for all U.S. businesses. Contrary to claims by Cnooc, the company's offer is simply not a commercial transaction. The company is 70% owned by the Chinese government and is relying on large subsidies in the form of government loans at below-market rates to finance its $18.5 billion offer. A conservative analysis shows that the value of these subsidies is at least $2.6 billion or $10 per Unocal share. These terms are simply not available to commercial companies operating in the open market. If Cnooc were to finance its offer on truly commercial terms available to most non-government owned corporations, as Chevron is, it simply couldn't make a competitive bid.
As one of the U.S.'s largest overseas investors, Chevron enthusiastically supports the principles of free and open trade. But, just as important, we think trade should also be fair, and conducted on a level playing field. Government subsidies, regardless of what country offers them, have no legitimate place in competitive M&A transactions. They distort markets, put commercial enterprises at a disadvantage, and disenfranchise investors in companies that don't benefit from subsidies.
The fact is that the Cnooc bid is precedent-setting and it is entirely appropriate for the U.S. government to carefully consider its implications. We respect that process and believe that it should be allowed to take its full course. In light of the review process, a central question for Unocal shareholders is whether they are comfortable with a bid for their company also being a test case for the broader global trade and investment issues that Cnooc's proposal has raised.
It is a paradox of today's global marketplace that sometimes our partners can also be our competitors. We have strong partnerships with Cnooc on several large energy projects. Chevron predecessors began doing business in China nearly 100 years ago and we continue to have significant business interests in China today. We expect to continue our relationship with China and Chinese enterprises for years to come -- as a strategic partner and an honorable competitor.
In the meantime, we're confident that Unocal shareholders, while appreciating the complexities of these issues, will see clearly through to the bottom line and endorse the strong and certain value presented by the merger agreement with Chevron.
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Mr. O'Reilly is Chairman and CEO of Chevron.
Document AWSJ000020050711e17c0000k
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直播实录：商务部介绍我国吸收外资等情况
2005年07月12日12:18 【字号 大 中 小】【留言】【论坛】【打印】【关闭】
人民网北京7月12日讯 记者庄红韬报道：今天上午10点，国新办召开新闻发布会，商务部部长助理陈健、福建省人民政府副省长叶双瑜介绍我国当前吸收外商投资和对外投资合作形势等有关情况,并答记者问。以下是此次发布会的直播实录。
[主持人 杨扬] 各位记者，女士们、先生们，早上好。今天我们请来了商务部部长助理陈健介绍我国当前吸收外商投资和对外投资合作形势，以及第九届中国国际投资贸易洽谈会等有关方面的情况。出席发布会的还有福建省副省长叶双瑜先生，厦门市人民政府副市长黄菱女士。现在我们先请陈健先生做一个简单的介绍，然后再请叶副省长做一个简单的介绍，在两位做完介绍之后，就请三位领导回答记者们的提问。 [10:05]
[陈健] 女士们、先生们，新闻界的朋友们，大家早上好！ 欢迎光临今天的新闻发布会。我愿借此机会，向各位通报中国吸收外资和对外投资的有关情况和政策。众所周知，中国对外开放的26年，是积极吸收外资促进发展的26年。中国政府将吸收外资作为对外开放的重要内容，认真研究全球跨国直接投资的发展趋势，及时把握世界经济结构调整的机遇，将吸收外资与中国经济发展目标相结合,制定积极合理有效的吸收外资政策措施，吸收外资水平不断提高，外商投资的结构和质量不断优化。 [10:07]
[陈健] 截至2005年5月底，全国累计批准设立外商投资企业525378个，合同外资金额11615亿美元，实际使用外资金额5844亿美元。外商投资遍及制造业、服务业、农业、基础设施等诸多领域。目前，来华投资的国家和地区超过190个，全球最大的500家跨国公司中已有近450家在华投资，其中30多家设立了地区总部，外商投资设立的研发机构超过600家。 [10:10]
[陈健] 吸收外资促进了中国经济跨越式发展。近年来，作为中国开放型经济的主力军，外商投资企业对国民经济发展的促进作用明显增强。2004年，外商投资企业固定资产投资占中国全社会固定资产投资总额的近12%，工业增加值占全国工业增加值的比重达28%，出口额占全国出口总额的57%。外商投资企业中直接就业人员为2400万人，占全国非农业劳动人口的约10%。 [10:10]
[陈健] 在做好吸收外资工作的同时，我国大力推动对外经济合作各项业务的发展，积极引导和推动企业“走出去”，并取得了可喜成绩。截至2004年底，我国累计非金融类对外直接投资368亿美元；对外承包工程累计完成营业额1140亿美元,合同额1563亿美元；对外劳务合作累计完成营业额308亿美元,合同额361亿美元，累计派出各类劳务人员319万人。 [10:11]
[陈健] 今年1-5月，我国非金融类对外直接投资18亿美元；我国对外承包工程完成营业额66亿美元，同比增长10%，新签合同额91亿美元，同比增长45%；对外劳务合作完成营业额16亿美元，同比增长12%，新签合同额15亿美元，同比增长28%；5月末在外各类劳务人员总数约为52万。 [10:12]
[陈健] 女士们，先生们，对外开放是中国政府长期坚持不变的基本国策。经过多年的努力，中国全方位、宽领域、多层次的对外开放格局已基本形成。今后，中国将继续根据自身发展的需要和对外承诺，进一步扩大对外开放，在不断开放国内市场，大力引进外资的同时，积极走向国际市场，促进世界经济进一步发展。在吸引外资方面，我们将进一步改善投资环境，完善利用外资的法律法规和政策措施，保持外商投资政策的稳定性和连续性。 [10:13]
[陈健] 重点鼓励外商投资高科技产业、现代服务业、现代农业，着力吸引跨国公司把更高技术水平、更大增值含量的加工制造环节和研发机构转移到中国，推动外资企业在技术研发、资源采购、市场开拓等方面同国内企业开展合作。在实施“走出去”战略方面，进一步加大实施“走出去”战略的力度，完善对外投资的法律法规和服务体系，赋予企业更大的境外经营管理自主权，健全风险防范机制，促进形成“引进来”和“走出去”有机结合的双向对外开放格局。 [10:13]
[陈健] 女士们，先生们，为吸引更多高质量外商投资，同时也为推动中国企业的海外投资，中华人民共和国商务部每年9月8－11日在厦门举办中国国际投资贸易洽谈会（投洽会）。投洽会自1997年以来已经成功举办八届，取得了丰硕的成果，共签订了15000多个各类投资合作项目，合同及协议投资金额共943亿美元。 [10:15]
[陈健] 全国31个省、市、自治区和国务院14个相关部门作为成员单位参与筹备和举办，每年吸引着来自几十个国家和地区的近万名政府、工商组织、跨国公司等代表踊跃参会。投洽会不仅是中国当前唯一以投资促进为主题的全国性经贸活动，也是目前亚洲乃至全球最具影响力的国际投资促进盛会。今年3月，投洽会通过了全球展览业协会（UFI）认证，成为全球唯一经UFI认证的投资促进类展会。随着规模不断扩大，水平不断提高，投洽会已逐步发展为举世瞩目的投资博览会。 [10:15]
[陈健] 中国市场充满了新的商机和新的活力，中国企业开展对外投资合作的势头方兴未艾。中国国际投资贸易洽谈会正是寻找与中国开展投资合作机会的最便捷通道，我们真诚地欢迎世界各地的工商界朋友参加投洽会。同时，我们也希望通过新闻界朋友的帮助，让更多的人了解中国对外开放的有关情况和政策，增进世界各国对中国的了解，促进中国与世界经济的共同发展。谢谢大家！ [10:16]
[杨扬] 现在我们请叶副省长对投洽会做一个简单的介绍。 [10:19]
[叶双瑜] 福建省副省长介绍第九届中国国际投资贸易洽谈会筹备工作简况。 [10:21]
[杨扬] 下面开始提问，请举手。 [10:23]
[新华社记者] 请问陈先生，刚才您提到了近年来中国在对外投资领域发展十分迅速，我们也注意到，资源领域也是中国对外投资的重点领域，您认为会不会在全球范围内出现中国和其他国家争夺市场的现象？ [10:24]
[陈健] 很好，这个问题确实是世界各国和新闻界很关注的问题。我想，中国的经济发展确实带来了资源消费的增加，这是事实，但是担心发展的中国与世界争夺资源的说法是不正确的。这是因为：第一，中国的发展始终首先坚持立足于国内，兼顾国外的资源政策。2003年发表的中国矿业资源白皮书曾经指出，中国主要依靠开发本国的矿产资源来保障现代化建设的需要。 [10:25]
[陈健] 中国政府鼓励勘查开发有市场需求的矿产资源，特别是西部地区的优质矿产资源，以提高国内矿产品的供应能力，同时引进国外资本和技术开发中国的矿产资源，利用国外市场与国外矿产品资源推动中国矿产企业和矿产品进入国际市场，是中国的一项重要政策。我们应当注意到，中国需求量很大，但是中国的资源蕴藏量也很大。 [10:26]
[陈健] 第二，中国和国外的资源合作早在五、六十年代就开始了，我们当时帮助坦桑尼亚开煤矿、铜矿等矿产，中国的对外矿业合作主要是通过市场的互换，同时通过矿业开发，促进共同发展。这里我想具体介绍一下，中国主要是通过矿产资源向他们转让开矿技术，把他们潜在的资源变为他们现实经济发展的竞争力。 [10:27]
[陈健] 第三，中国坚持科学的发展观，我们正在加快经济结构的调整和转变经济增长的方式，我们推行节约型的、节能性的经济，我们大力发展循环经济，积极抑制高耗能产业，推动建立能源节约型的国民经济体系。改善能源结构，积极发展优质能源、促进新能源和可再生能源的开发利用，推广清洁能源，提高能源利用率，广泛采取节能技术。正因为采取了这些措施，各位新闻界的朋友可以关注一下，我们国家的节能水平正在不断提高。 [10:28]
[陈健] 第四，最近国际上有一些说法，认为中国的能源需求会扩大，从而会发生冲突，这些说法是没有根据的。因为中国已经正在采取一些措施，不需要像当年一些国家一样，通过扩张和强占资源来取得自身的经济发展。中国奉行和平发展的政策，我们将一如既往在平等互利的基础上，同世界上一些友好国家开展合作，并建立公正合理的经济新秩序，包括国际能源合作新秩序，为促进人类共同发展而努力。谢谢。 [10:28]
[凤凰卫视记者] 刚刚叶省长在谈话当中谈到海峡两岸经贸合作出现了新的发展和形势，现在大的方面，开放进口的台湾水果中有18种，其中15种实现了零关税，请问叶省长，福建省在这方面有没有感到竞争的压力？可不可以具体介绍一下福建省和台湾在这些方面的情况。 [10:33]
[叶双瑜] 首先我感谢凤凰台记者提了一个很好的问题。两岸的经贸合作一直是大家都非常关心的，可以说也是我们福建省这一段时间积极推动的一项重点工作。首先我说一下，福建省委省政府去年提出了一个新的发展战略，这个发展战略叫做“建设对外开放、协调发展、全面繁荣的海峡西岸经济区”，提出这么一个战略的基本依据，一方面是经济全球化和区域经济发展出现了新的变化和新的形势。 [10:36]
[叶双瑜] 另一方面是我们统一祖国的大业进程正在加快，福建作为唯一的一个直接跟台湾省一水之隔的省份，在统一祖国大业当中优势、责任都是特别重要的。第三方面，福建省作为一个非常有特点的区域经济，也是我们国家最早实行对外开放、最早兴办经济特区的省份。在区域经济发展当中，我们觉得应该突出自己的特色、自己的优势，尤其是对台经贸合作的优势。 [10:36]
[叶双瑜] 我介绍两组数字，一组数字就是福建吸收台商投资的情况，当然也是这位记者提到的，台湾的水果最近在大陆的市场，特别是通过福建销往大陆的一些情况。福建一直都是台商投资的热点和重点地区，可以说台商投资大陆，是从福建开始的，福建也是台商投资最为密集的。从1981年第一家台资企业在福建落户以来，台商的投资一直是稳步增长，到去年底，福建省已经累计批准台资项目8082项，合同台资138.7亿美元，实际到资103亿美元。 [10:39]
[叶双瑜] 台商投资的趋势在今年1到5月份更为踊跃，因为两岸出现了一些积极的变化，两岸合作的经贸是一个非常有力的推动，台商投资的信心也越来越强。根据我们统计的数字，到今年上半年，合同台资已经达到5.9亿美元，这只是在福建省，根据我们了解，在大陆其他省，今年以来的增长也是非常快的。实际到资，在福建省今年上半年已经达到4.42亿美元，合同台资的增幅比去年同期增长了94.9％，实际到资增长了54.8％，合同台资增长更快，说明项目后续的发展趋势将越来越好。 [10:39]
[叶双瑜] 从产业方面看，随着开放水平的提高，产业结构的升级，包括国家宏观调控的进一步实施，科学发展观的落实，我们今后将着重在石油化工、机械、电子这三大主导产业，以及纺织、建材、冶金和高新技术产业，还有农业、金融、物流、旅游等其他领域再进一步扩大与台湾的经贸合作与交流。 [10:40]
[叶双瑜] 刚才说到台湾的水果进入大陆市场，这也是大家很关注的，从今年连宋访问大陆以后，两岸在这方面的合作有一些新的突破，台湾的农产品，尤其是水果和其他的台湾有特色的农产品进入大陆市场，已经有了一个很好的开端。福建省在这些方面捷足先登，台湾第一批的零关税的水果是从福建开始进入大陆市场的，那就是5月18日在福建举办的海峡经贸交流洽谈会上。 [10:43]
[叶双瑜] 因为福建独特的优势，我们北京的朋友和新闻界的朋友在北京吃到的台湾的水果，有相当一部分是通过福建的口岸进来的，我们已经可以做到今天上午在台湾采摘的水果，明天下午就可以到福建市场上上架了，这个通关是非常便捷的，也是非常高效的，这点得到了台湾农会和水果商的非常好的评价。 [10:43]
[叶双瑜] 至于说福建省跟大陆其它各个省是不是形成竞争，我对这点是这么看的：第一，福建的优势是独特的，是其他省份很多方面不具备的，或者没那么明显的。第二，两岸的合作不仅仅限于福建，应该是整个大陆各个省，应该是海峡两岸的合作，福建在独特的区位，也有条件为内地各个省开展对台的经贸合作给予支持和必要的帮助。我再用一句话表达一下福建对台的优势：地缘相近，血缘相亲，文缘相通，商缘相连，法缘悠久。 [10:48]
[外国记者] 我的问题提给陈健部长助理的，您刚才介绍了非常全面的关于2005年5月底中国吸收外商投资的情况，您能不能给我们具体的介绍今年1月到6月份累计的外商投资的数额，包括合同量和实际外商投资额。第二个问题是关于今年看到外商投资在中国出现了一个下降，下降比例是0.8％，这是2000年9月份以来第一次出现下降，您是否能给这个现象一些解释？中国政府对此是否表示担忧？具体的原因是什么？是不是有宏观调控的原因，还是银行借贷的缩紧，或者其他任何原因？ [10:51]
[陈健] 谢谢。刚才我笼统地讲了一个2005年5月份的数字，现在我具体给您讲一下2005年1到5月的情况。因为6月份的数字还没有出来，等到6月份的数字出来一定给你。今年1到5月，新吸收外商投资企业16437家，比上年同期下降了4.75％；合同外资金额649.7亿美元，同比增长14.88％，实际使用外资金额223.66亿美元，同比下降了0.79％。 [10:52]
[陈健] 还给你一个数字，5月份当月的全国实际使用外资金额48.94亿美元，比上年同比下降了10.29％。我想，这个数字从总的情况来看，从合同外资金额来看，还是增长了，也就是说，我们发展的后劲还是有的。但是，确实实际使用外资下降了，造成这种下降的原因是多方面的。 [10:52]
[陈健] 一是作为投资项目来讲，逐月的比较意义并不很大。有时候一个两个大项目的洽谈成功，会突然使得投资数字上去，有时候一个两个项目，由于碰到局部的困难而没有谈成，数字就会下降。至于你说的是不是和宏观经济调控政策有关、银行信贷紧缩政策有关，我想一定和宏观经济政策和微观因素具体相关的，但是这两个月的下降，我想跟这个政策并没有直接的关系。 [10:56]
[陈健] 中国政府将继续坚定地坚持改革开放的政策，坚定地坚持吸引外资的政策，进一步改善外商投资企业投资的环境，促进外商对华投资。我们最近正在进一步扩大外商投资领域，比如我们在促进东北老工业基地进一步扩大开放方面，就采取了新的政策，以促进外商对华的投资。我们对未来充满信心。谢谢。 [10:56]
[中央电视台记者] 请问陈健部长助理，内资企业认为给予外资企业税收优惠是不公平的，此前有部门认为应当统一内外资企业所得税，您怎么看待这个问题？中国对外资的优惠政策还会持续多久？谢谢。 [10:58]
[陈健] 据我所知，内外资企业所得税问题是倍受关注的一个问题，也是很长时间以来存在争议的问题。税收作为调节经济的重要手段，其政策和宗旨应该是促进国民经济的健康发展，我们利用外资的政策也正是基于这样一个目的制定和实施的。我想向新闻界的朋友强调说明三点：第一，给外商投资企业一定的优惠并不违反世贸组织的国民待遇原则，我就不展开说了，大家都很明白。 [10:59]
[陈健] 第二，当前世界经济正在新的一轮产业转移过程当中，我们能不能抓住这个新的产业调整的机遇，对我国实现小康社会的目标来说是至关重要的。我们在这里讲吸引外资，并不仅仅就是一个资金问题，因为我们也有我们的储备，而通过吸引外资带来了技术、管理等诸多的生产要素，因此更重要的是我们要参与世界经济新的分工与世界经济的产业链相衔接，这个机遇不能丢掉。 [11:00]
[陈健] 第三，以优惠的政策吸引外商投资，现在恐怕是世界各国普遍采用的做法，不仅是发展中国家，发达国家也是这样。前不久我见了比利时的卡斯芒大区经济部长，他给我讲了一大串中国到那里投资的优惠政策，有的远远高于我们。 [11:05]
[陈健] 目前也应关注到我们的周边国家，以及一些发展中国家，相继出台了许多优惠政策，现在我们的优惠政策与周边国家地区和其他不少国家相比，优势并不明显，仅靠市场规模、劳动力成本等比较优势，难以在吸收外资的竞争中占据有利的地位。尤其现阶段我国相对劳动力成本在上升，资源又短缺，在没有相对稳定的、可靠的替代政策的情况下，应该保持吸收外资政策的连续性和稳定性。 [11:06]
[陈健] 对外开放是我们的基本国策，同时我们对WTO的承诺也已经存在了，因此我想我们的对外开放、吸引外资对华的投资政策也将是长期的。总之，对这个问题我们不应该仅仅局限在一个点上看，应该是在更广的视角观察外商对华投资。 [11:06]
[福建日报记者] 请问黄市长，国亲两党日前相继访问大陆，掀起了两岸经贸往来的高潮，投洽会将在厦门举办，对促进两岸经贸往来有什么特殊的优势？本届投洽会在对台经贸上有何特色？将取得哪些突破？谢谢。 [11:07]
[黄菱] 中国国际投资贸易洽谈会一直是两岸经贸交流的一个重要平台，尤其是我们福建省对台经贸交流的一个重要平台。今年以来，两岸的关系出现了一些积极的变化，第九届投洽会将充分利用展览、项目对接、论坛研讨会这三个具体的平台来加大我们对台经贸的交流。具体有下面几项活动： [11:09]
[黄菱] 首先是我们在今年第九届投洽会期间将举办首届海峡旅游博览会，同时举办海峡旅游的高峰论坛；其次在项目对接上，尤其针对台湾对大陆投资比较集中的农业合作、旅游交往、信息电子产品，以及广电产业举办专场的项目对接会；第三是就两岸经贸界所关心的一些投资领域，我们将举办像农业合作交流研讨会等相关题目的一系列的论坛和研讨会。目前这些活动在我们的宣传和推介过程中间得到了两岸经贸界和投资者热烈的响应，所有的准备工作进展都比较迅速和顺利。就向大家介绍这么多，谢谢。 [11:09]
[中国日报记者] 请问陈健部长助理，刚才您一直提到怎样吸引外资，但是从数据上看，中国过去20年累计吸引外资的金额已经达到了5000亿美元，去年合同金额和实际利用外资金额都已经创了历史最高水平，是不是有这种担心，就是吸收外资已经过大？谢谢。 [11:09]
[陈健] 关于这个问题，改革开放以来，确实如你所说，我们累计实际使用外资金额已经超过了5600亿美元。最近几年我们也看到，我们吸收外资一直保持较大的增长规模，但是中国吸收外资并不存在规模过大的问题。这是因为，我们按照国际通行的计算方法，截至目前，考虑外商投资企业有一些是停止了，有一些中/终止合作、有一些停顿下来的合作、资产折旧和撤资等情况，按照国际的标准估测，我国吸收外资FDI的存量为2130亿美元，占全球的比重不到1％。 [11:11]
[陈健] 还有三个比较数字，一个外国的FDI占国内生产总值的比例，占固定资产投资的比例和人均占有FDI的比重，这三个数字都低于世界平均水平。有一些差距还很大，特别是人均吸收外资的比例，差距还很大。2003年，我国吸收外商直接投资占DGP的比重为3.8％，人均吸收外商投资只有41美元，远低于发达国家530美元和世界人均107美元的投资。同样是当年吸收外商直接投资占全社会固定资产投资总额的比重为8％。 [11:15]
[陈健] 还有一点，我刚刚讲到了，对吸引外资的政策，我们不能仅仅局限于从资金这个数字上看，因为我们要跟国际产业链结合，我们要参与国际分工，我们要带进技术、管理等诸多要素，因此我们得继续坚持对外开放这个政策，吸引外商直接投资的政策还是不变的。当然，我们要注意一个问题，就是我们今后吸引外资工作要更多地着眼于提高利用外资的质量和水平上，以促进我们国民经济持续、快速、健康、协调发展，在这个过程当中发挥更大的作用。谢谢。 [11:15]
[杨扬] 谢谢三位领导，也谢谢各位记者，今天的新闻发布会到此结束。 [11:15]
来源：人民网 （责任编辑：周昕）
直播实录：商务部介绍我国吸收外资等情况
2005年07月12日12:18 【字号 大 中 小】【留言】【论坛】【打印】【关闭】
人民网北京7月12日讯 记者庄红韬报道：今天上午10点，国新办召开新闻发布会，商务部部长助理陈健、福建省人民政府副省长叶双瑜介绍我国当前吸收外商投资和对外投资合作形势等有关情况,并答记者问。以下是此次发布会的直播实录。
[主持人 杨扬] 各位记者，女士们、先生们，早上好。今天我们请来了商务部部长助理陈健介绍我国当前吸收外商投资和对外投资合作形势，以及第九届中国国际投资贸易洽谈会等有关方面的情况。出席发布会的还有福建省副省长叶双瑜先生，厦门市人民政府副市长黄菱女士。现在我们先请陈健先生做一个简单的介绍，然后再请叶副省长做一个简单的介绍，在两位做完介绍之后，就请三位领导回答记者们的提问。 [10:05]
[陈健] 女士们、先生们，新闻界的朋友们，大家早上好！ 欢迎光临今天的新闻发布会。我愿借此机会，向各位通报中国吸收外资和对外投资的有关情况和政策。众所周知，中国对外开放的26年，是积极吸收外资促进发展的26年。中国政府将吸收外资作为对外开放的重要内容，认真研究全球跨国直接投资的发展趋势，及时把握世界经济结构调整的机遇，将吸收外资与中国经济发展目标相结合,制定积极合理有效的吸收外资政策措施，吸收外资水平不断提高，外商投资的结构和质量不断优化。 [10:07]
[陈健] 截至2005年5月底，全国累计批准设立外商投资企业525378个，合同外资金额11615亿美元，实际使用外资金额5844亿美元。外商投资遍及制造业、服务业、农业、基础设施等诸多领域。目前，来华投资的国家和地区超过190个，全球最大的500家跨国公司中已有近450家在华投资，其中30多家设立了地区总部，外商投资设立的研发机构超过600家。 [10:10]
[陈健] 吸收外资促进了中国经济跨越式发展。近年来，作为中国开放型经济的主力军，外商投资企业对国民经济发展的促进作用明显增强。2004年，外商投资企业固定资产投资占中国全社会固定资产投资总额的近12%，工业增加值占全国工业增加值的比重达28%，出口额占全国出口总额的57%。外商投资企业中直接就业人员为2400万人，占全国非农业劳动人口的约10%。 [10:10]
[陈健] 在做好吸收外资工作的同时，我国大力推动对外经济合作各项业务的发展，积极引导和推动企业“走出去”，并取得了可喜成绩。截至2004年底，我国累计非金融类对外直接投资368亿美元；对外承包工程累计完成营业额1140亿美元,合同额1563亿美元；对外劳务合作累计完成营业额308亿美元,合同额361亿美元，累计派出各类劳务人员319万人。 [10:11]
[陈健] 今年1-5月，我国非金融类对外直接投资18亿美元；我国对外承包工程完成营业额66亿美元，同比增长10%，新签合同额91亿美元，同比增长45%；对外劳务合作完成营业额16亿美元，同比增长12%，新签合同额15亿美元，同比增长28%；5月末在外各类劳务人员总数约为52万。 [10:12]
[陈健] 女士们，先生们，对外开放是中国政府长期坚持不变的基本国策。经过多年的努力，中国全方位、宽领域、多层次的对外开放格局已基本形成。今后，中国将继续根据自身发展的需要和对外承诺，进一步扩大对外开放，在不断开放国内市场，大力引进外资的同时，积极走向国际市场，促进世界经济进一步发展。在吸引外资方面，我们将进一步改善投资环境，完善利用外资的法律法规和政策措施，保持外商投资政策的稳定性和连续性。 [10:13]
[陈健] 重点鼓励外商投资高科技产业、现代服务业、现代农业，着力吸引跨国公司把更高技术水平、更大增值含量的加工制造环节和研发机构转移到中国，推动外资企业在技术研发、资源采购、市场开拓等方面同国内企业开展合作。在实施“走出去”战略方面，进一步加大实施“走出去”战略的力度，完善对外投资的法律法规和服务体系，赋予企业更大的境外经营管理自主权，健全风险防范机制，促进形成“引进来”和“走出去”有机结合的双向对外开放格局。 [10:13]
[陈健] 女士们，先生们，为吸引更多高质量外商投资，同时也为推动中国企业的海外投资，中华人民共和国商务部每年9月8－11日在厦门举办中国国际投资贸易洽谈会（投洽会）。投洽会自1997年以来已经成功举办八届，取得了丰硕的成果，共签订了15000多个各类投资合作项目，合同及协议投资金额共943亿美元。 [10:15]
[陈健] 全国31个省、市、自治区和国务院14个相关部门作为成员单位参与筹备和举办，每年吸引着来自几十个国家和地区的近万名政府、工商组织、跨国公司等代表踊跃参会。投洽会不仅是中国当前唯一以投资促进为主题的全国性经贸活动，也是目前亚洲乃至全球最具影响力的国际投资促进盛会。今年3月，投洽会通过了全球展览业协会（UFI）认证，成为全球唯一经UFI认证的投资促进类展会。随着规模不断扩大，水平不断提高，投洽会已逐步发展为举世瞩目的投资博览会。 [10:15]
[陈健] 中国市场充满了新的商机和新的活力，中国企业开展对外投资合作的势头方兴未艾。中国国际投资贸易洽谈会正是寻找与中国开展投资合作机会的最便捷通道，我们真诚地欢迎世界各地的工商界朋友参加投洽会。同时，我们也希望通过新闻界朋友的帮助，让更多的人了解中国对外开放的有关情况和政策，增进世界各国对中国的了解，促进中国与世界经济的共同发展。谢谢大家！ [10:16]
[杨扬] 现在我们请叶副省长对投洽会做一个简单的介绍。 [10:19]
[叶双瑜] 福建省副省长介绍第九届中国国际投资贸易洽谈会筹备工作简况。 [10:21]
[杨扬] 下面开始提问，请举手。 [10:23]
[新华社记者] 请问陈先生，刚才您提到了近年来中国在对外投资领域发展十分迅速，我们也注意到，资源领域也是中国对外投资的重点领域，您认为会不会在全球范围内出现中国和其他国家争夺市场的现象？ [10:24]
[陈健] 很好，这个问题确实是世界各国和新闻界很关注的问题。我想，中国的经济发展确实带来了资源消费的增加，这是事实，但是担心发展的中国与世界争夺资源的说法是不正确的。这是因为：第一，中国的发展始终首先坚持立足于国内，兼顾国外的资源政策。2003年发表的中国矿业资源白皮书曾经指出，中国主要依靠开发本国的矿产资源来保障现代化建设的需要。 [10:25]
[陈健] 中国政府鼓励勘查开发有市场需求的矿产资源，特别是西部地区的优质矿产资源，以提高国内矿产品的供应能力，同时引进国外资本和技术开发中国的矿产资源，利用国外市场与国外矿产品资源推动中国矿产企业和矿产品进入国际市场，是中国的一项重要政策。我们应当注意到，中国需求量很大，但是中国的资源蕴藏量也很大。 [10:26]
[陈健] 第二，中国和国外的资源合作早在五、六十年代就开始了，我们当时帮助坦桑尼亚开煤矿、铜矿等矿产，中国的对外矿业合作主要是通过市场的互换，同时通过矿业开发，促进共同发展。这里我想具体介绍一下，中国主要是通过矿产资源向他们转让开矿技术，把他们潜在的资源变为他们现实经济发展的竞争力。 [10:27]
[陈健] 第三，中国坚持科学的发展观，我们正在加快经济结构的调整和转变经济增长的方式，我们推行节约型的、节能性的经济，我们大力发展循环经济，积极抑制高耗能产业，推动建立能源节约型的国民经济体系。改善能源结构，积极发展优质能源、促进新能源和可再生能源的开发利用，推广清洁能源，提高能源利用率，广泛采取节能技术。正因为采取了这些措施，各位新闻界的朋友可以关注一下，我们国家的节能水平正在不断提高。 [10:28]
[陈健] 第四，最近国际上有一些说法，认为中国的能源需求会扩大，从而会发生冲突，这些说法是没有根据的。因为中国已经正在采取一些措施，不需要像当年一些国家一样，通过扩张和强占资源来取得自身的经济发展。中国奉行和平发展的政策，我们将一如既往在平等互利的基础上，同世界上一些友好国家开展合作，并建立公正合理的经济新秩序，包括国际能源合作新秩序，为促进人类共同发展而努力。谢谢。 [10:28]
[凤凰卫视记者] 刚刚叶省长在谈话当中谈到海峡两岸经贸合作出现了新的发展和形势，现在大的方面，开放进口的台湾水果中有18种，其中15种实现了零关税，请问叶省长，福建省在这方面有没有感到竞争的压力？可不可以具体介绍一下福建省和台湾在这些方面的情况。 [10:33]
[叶双瑜] 首先我感谢凤凰台记者提了一个很好的问题。两岸的经贸合作一直是大家都非常关心的，可以说也是我们福建省这一段时间积极推动的一项重点工作。首先我说一下，福建省委省政府去年提出了一个新的发展战略，这个发展战略叫做“建设对外开放、协调发展、全面繁荣的海峡西岸经济区”，提出这么一个战略的基本依据，一方面是经济全球化和区域经济发展出现了新的变化和新的形势。 [10:36]
[叶双瑜] 另一方面是我们统一祖国的大业进程正在加快，福建作为唯一的一个直接跟台湾省一水之隔的省份，在统一祖国大业当中优势、责任都是特别重要的。第三方面，福建省作为一个非常有特点的区域经济，也是我们国家最早实行对外开放、最早兴办经济特区的省份。在区域经济发展当中，我们觉得应该突出自己的特色、自己的优势，尤其是对台经贸合作的优势。 [10:36]
[叶双瑜] 我介绍两组数字，一组数字就是福建吸收台商投资的情况，当然也是这位记者提到的，台湾的水果最近在大陆的市场，特别是通过福建销往大陆的一些情况。福建一直都是台商投资的热点和重点地区，可以说台商投资大陆，是从福建开始的，福建也是台商投资最为密集的。从1981年第一家台资企业在福建落户以来，台商的投资一直是稳步增长，到去年底，福建省已经累计批准台资项目8082项，合同台资138.7亿美元，实际到资103亿美元。 [10:39]
[叶双瑜] 台商投资的趋势在今年1到5月份更为踊跃，因为两岸出现了一些积极的变化，两岸合作的经贸是一个非常有力的推动，台商投资的信心也越来越强。根据我们统计的数字，到今年上半年，合同台资已经达到5.9亿美元，这只是在福建省，根据我们了解，在大陆其他省，今年以来的增长也是非常快的。实际到资，在福建省今年上半年已经达到4.42亿美元，合同台资的增幅比去年同期增长了94.9％，实际到资增长了54.8％，合同台资增长更快，说明项目后续的发展趋势将越来越好。 [10:39]
[叶双瑜] 从产业方面看，随着开放水平的提高，产业结构的升级，包括国家宏观调控的进一步实施，科学发展观的落实，我们今后将着重在石油化工、机械、电子这三大主导产业，以及纺织、建材、冶金和高新技术产业，还有农业、金融、物流、旅游等其他领域再进一步扩大与台湾的经贸合作与交流。 [10:40]
[叶双瑜] 刚才说到台湾的水果进入大陆市场，这也是大家很关注的，从今年连宋访问大陆以后，两岸在这方面的合作有一些新的突破，台湾的农产品，尤其是水果和其他的台湾有特色的农产品进入大陆市场，已经有了一个很好的开端。福建省在这些方面捷足先登，台湾第一批的零关税的水果是从福建开始进入大陆市场的，那就是5月18日在福建举办的海峡经贸交流洽谈会上。 [10:43]
[叶双瑜] 因为福建独特的优势，我们北京的朋友和新闻界的朋友在北京吃到的台湾的水果，有相当一部分是通过福建的口岸进来的，我们已经可以做到今天上午在台湾采摘的水果，明天下午就可以到福建市场上上架了，这个通关是非常便捷的，也是非常高效的，这点得到了台湾农会和水果商的非常好的评价。 [10:43]
[叶双瑜] 至于说福建省跟大陆其它各个省是不是形成竞争，我对这点是这么看的：第一，福建的优势是独特的，是其他省份很多方面不具备的，或者没那么明显的。第二，两岸的合作不仅仅限于福建，应该是整个大陆各个省，应该是海峡两岸的合作，福建在独特的区位，也有条件为内地各个省开展对台的经贸合作给予支持和必要的帮助。我再用一句话表达一下福建对台的优势：地缘相近，血缘相亲，文缘相通，商缘相连，法缘悠久。 [10:48]
[外国记者] 我的问题提给陈健部长助理的，您刚才介绍了非常全面的关于2005年5月底中国吸收外商投资的情况，您能不能给我们具体的介绍今年1月到6月份累计的外商投资的数额，包括合同量和实际外商投资额。第二个问题是关于今年看到外商投资在中国出现了一个下降，下降比例是0.8％，这是2000年9月份以来第一次出现下降，您是否能给这个现象一些解释？中国政府对此是否表示担忧？具体的原因是什么？是不是有宏观调控的原因，还是银行借贷的缩紧，或者其他任何原因？ [10:51]
[陈健] 谢谢。刚才我笼统地讲了一个2005年5月份的数字，现在我具体给您讲一下2005年1到5月的情况。因为6月份的数字还没有出来，等到6月份的数字出来一定给你。今年1到5月，新吸收外商投资企业16437家，比上年同期下降了4.75％；合同外资金额649.7亿美元，同比增长14.88％，实际使用外资金额223.66亿美元，同比下降了0.79％。 [10:52]
[陈健] 还给你一个数字，5月份当月的全国实际使用外资金额48.94亿美元，比上年同比下降了10.29％。我想，这个数字从总的情况来看，从合同外资金额来看，还是增长了，也就是说，我们发展的后劲还是有的。但是，确实实际使用外资下降了，造成这种下降的原因是多方面的。 [10:52]
[陈健] 一是作为投资项目来讲，逐月的比较意义并不很大。有时候一个两个大项目的洽谈成功，会突然使得投资数字上去，有时候一个两个项目，由于碰到局部的困难而没有谈成，数字就会下降。至于你说的是不是和宏观经济调控政策有关、银行信贷紧缩政策有关，我想一定和宏观经济政策和微观因素具体相关的，但是这两个月的下降，我想跟这个政策并没有直接的关系。 [10:56]
[陈健] 中国政府将继续坚定地坚持改革开放的政策，坚定地坚持吸引外资的政策，进一步改善外商投资企业投资的环境，促进外商对华投资。我们最近正在进一步扩大外商投资领域，比如我们在促进东北老工业基地进一步扩大开放方面，就采取了新的政策，以促进外商对华的投资。我们对未来充满信心。谢谢。 [10:56]
[中央电视台记者] 请问陈健部长助理，内资企业认为给予外资企业税收优惠是不公平的，此前有部门认为应当统一内外资企业所得税，您怎么看待这个问题？中国对外资的优惠政策还会持续多久？谢谢。 [10:58]
[陈健] 据我所知，内外资企业所得税问题是倍受关注的一个问题，也是很长时间以来存在争议的问题。税收作为调节经济的重要手段，其政策和宗旨应该是促进国民经济的健康发展，我们利用外资的政策也正是基于这样一个目的制定和实施的。我想向新闻界的朋友强调说明三点：第一，给外商投资企业一定的优惠并不违反世贸组织的国民待遇原则，我就不展开说了，大家都很明白。 [10:59]
[陈健] 第二，当前世界经济正在新的一轮产业转移过程当中，我们能不能抓住这个新的产业调整的机遇，对我国实现小康社会的目标来说是至关重要的。我们在这里讲吸引外资，并不仅仅就是一个资金问题，因为我们也有我们的储备，而通过吸引外资带来了技术、管理等诸多的生产要素，因此更重要的是我们要参与世界经济新的分工与世界经济的产业链相衔接，这个机遇不能丢掉。 [11:00]
[陈健] 第三，以优惠的政策吸引外商投资，现在恐怕是世界各国普遍采用的做法，不仅是发展中国家，发达国家也是这样。前不久我见了比利时的卡斯芒大区经济部长，他给我讲了一大串中国到那里投资的优惠政策，有的远远高于我们。 [11:05]
[陈健] 目前也应关注到我们的周边国家，以及一些发展中国家，相继出台了许多优惠政策，现在我们的优惠政策与周边国家地区和其他不少国家相比，优势并不明显，仅靠市场规模、劳动力成本等比较优势，难以在吸收外资的竞争中占据有利的地位。尤其现阶段我国相对劳动力成本在上升，资源又短缺，在没有相对稳定的、可靠的替代政策的情况下，应该保持吸收外资政策的连续性和稳定性。 [11:06]
[陈健] 对外开放是我们的基本国策，同时我们对WTO的承诺也已经存在了，因此我想我们的对外开放、吸引外资对华的投资政策也将是长期的。总之，对这个问题我们不应该仅仅局限在一个点上看，应该是在更广的视角观察外商对华投资。 [11:06]
[福建日报记者] 请问黄市长，国亲两党日前相继访问大陆，掀起了两岸经贸往来的高潮，投洽会将在厦门举办，对促进两岸经贸往来有什么特殊的优势？本届投洽会在对台经贸上有何特色？将取得哪些突破？谢谢。 [11:07]
[黄菱] 中国国际投资贸易洽谈会一直是两岸经贸交流的一个重要平台，尤其是我们福建省对台经贸交流的一个重要平台。今年以来，两岸的关系出现了一些积极的变化，第九届投洽会将充分利用展览、项目对接、论坛研讨会这三个具体的平台来加大我们对台经贸的交流。具体有下面几项活动： [11:09]
[黄菱] 首先是我们在今年第九届投洽会期间将举办首届海峡旅游博览会，同时举办海峡旅游的高峰论坛；其次在项目对接上，尤其针对台湾对大陆投资比较集中的农业合作、旅游交往、信息电子产品，以及广电产业举办专场的项目对接会；第三是就两岸经贸界所关心的一些投资领域，我们将举办像农业合作交流研讨会等相关题目的一系列的论坛和研讨会。目前这些活动在我们的宣传和推介过程中间得到了两岸经贸界和投资者热烈的响应，所有的准备工作进展都比较迅速和顺利。就向大家介绍这么多，谢谢。 [11:09]
[中国日报记者] 请问陈健部长助理，刚才您一直提到怎样吸引外资，但是从数据上看，中国过去20年累计吸引外资的金额已经达到了5000亿美元，去年合同金额和实际利用外资金额都已经创了历史最高水平，是不是有这种担心，就是吸收外资已经过大？谢谢。 [11:09]
[陈健] 关于这个问题，改革开放以来，确实如你所说，我们累计实际使用外资金额已经超过了5600亿美元。最近几年我们也看到，我们吸收外资一直保持较大的增长规模，但是中国吸收外资并不存在规模过大的问题。这是因为，我们按照国际通行的计算方法，截至目前，考虑外商投资企业有一些是停止了，有一些中/终止合作、有一些停顿下来的合作、资产折旧和撤资等情况，按照国际的标准估测，我国吸收外资FDI的存量为2130亿美元，占全球的比重不到1％。 [11:11]
[陈健] 还有三个比较数字，一个外国的FDI占国内生产总值的比例，占固定资产投资的比例和人均占有FDI的比重，这三个数字都低于世界平均水平。有一些差距还很大，特别是人均吸收外资的比例，差距还很大。2003年，我国吸收外商直接投资占DGP的比重为3.8％，人均吸收外商投资只有41美元，远低于发达国家530美元和世界人均107美元的投资。同样是当年吸收外商直接投资占全社会固定资产投资总额的比重为8％。 [11:15]
[陈健] 还有一点，我刚刚讲到了，对吸引外资的政策，我们不能仅仅局限于从资金这个数字上看，因为我们要跟国际产业链结合，我们要参与国际分工，我们要带进技术、管理等诸多要素，因此我们得继续坚持对外开放这个政策，吸引外商直接投资的政策还是不变的。当然，我们要注意一个问题，就是我们今后吸引外资工作要更多地着眼于提高利用外资的质量和水平上，以促进我们国民经济持续、快速、健康、协调发展，在这个过程当中发挥更大的作用。谢谢。 [11:15]
[杨扬] 谢谢三位领导，也谢谢各位记者，今天的新闻发布会到此结束。 [11:15]
来源：人民网 （责任编辑：周昕）
Monday, July 11, 2005
Why is America Worried?
By Fu Chengyu
1,504 words
6 July 2005
The Asian Wall Street Journal
A11
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
Two weeks ago, our company, Cnooc Ltd., extended a friendly, all-cash offer to Unocal's board of directors. After being invited to engage in dialogue with Unocal earlier this year, we entered detailed negotiations regarding a possible merger. We have made our offer because Unocal's asset base -- 70% of its oil and gas reserves are close to Asian markets where we operate -- fits our business extremely well. We are listed on the New York and Hong Kong Stock Exchanges and have fiduciary obligations to all of our shareholders. We believe this merger will offer our shareholders, which include many leading U.S. institutional investors, tremendous growth opportunities.
The majority of Unocal's Asian reserves are gas. Its proven reserves are mostly committed to long-term contracts in the region, notably for domestic gas markets in Thailand and Bangladesh. Unocal also has very substantial gas resources -- or unbooked reserves -- particularly offshore East Kalimantan, Indonesia, which will be developed for the production of Liquefied Natural Gas (LNG). Although Cnooc will have no direct influence over the marketing of the LNG, since this is conducted by Indonesian state-owned entities, it is expected that the clean-burning LNG will be sold primarily into Asian markets.
We also believe that our two companies can bring even more oil and gas to the U.S. market by building on Unocal's strength in the Gulf of Mexico and other producing areas in the U.S. Last year, Cnooc grew production of oil and gas by over 7%. Over the past three years, we achieved an average reserve replacement ratio of about 213%, one of the best records in the industry.
We have partnered with many leading oil and gas companies in a significant number of projects in China and elsewhere in the world. An example is the memorandum of understanding we have signed with Chevron to participate in the Gorgon LNG project in Australia which is expected to supply LNG both to China and the U.S. Of course, sometimes we compete with these companies as well -- in this case with Chevron for Unocal. That is because we are both trying to pay the best price, for a good business. I adhere to the belief that the highest price wins. Given that our bid is about 11% -- or $2 billion -- higher than Chevron's stock-and-cash deal as of today, this competition also benefits Unocal's shareholders, in addition to our own. The bottom line is that our all-cash offer puts more dollars in the pockets of shareholders and is not subject to the daily fluctuations and uncertainty of the stock market.
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There has been huge change in China in recent years, as more and more businesses have learned to focus on proper financial management and corporate governance disciplines. Cnooc is recognized for being well ahead of most of them, however. We are a listed company, with half of our eight-member board composed of non-executive independent directors. Our parent company has been a leader in the development of the oil and gas industry in China since its formation in 1982. It is investment-grade credit-rated, has net cash on its balance sheet and is highly profitable.
Furthermore, ours is a business run by professional business people. Most of the team here, including me, have been in the oil and gas industry throughout our careers. We are also very international in our approach. We have been working in joint ventures with other leading oil companies for 20 years. After my masters degree at the University of Southern California, I spent 13 years working with international oil companies, many of them U.S. oil companies. When I led Phillips' joint venture with Cnooc in China, we had 200 expatriate employees working alongside 200 Chinese. That was a very positive experience, and I want to share with you my great personal pride at the thought of leading a similar effort to combine the talents of an American and Chinese company. I am therefore very pleased that Cnooc and Unocal have begun discussing the merits of our offer and I hope we can reach an agreement on a consensual transaction in the near future.
We have recently filed with the Committee on Foreign Investment in the United States (CFIUS) and look forward to entering discussions with them and answering all their questions as soon as possible. We are prepared to agree necessary modifications to our proposal in order to alleviate any concerns they may have.
When my company's board authorized the offer for Unocal, I knew that the transaction would create great interest -- and even concern. That is why we set out straight away, to address those concerns with up-front commitments surrounding our deal.
The most fundamental point of concern that we face is that American oil and gas should stay in America -- and I promise that we will continue Unocal's sales practice of selling all, or substantially all, U.S. oil and gas in U.S. markets. The American public's anxiety -- that we plan to take fuel back to China -- is based on a misunderstanding. It would not be economically rational to take U.S. oil and gas to China -- not least, as the U.S. is one of the strongest markets in the world. In fact we will increase production in the U.S., particularly from the Gulf of Mexico. That will mean more oil for U.S. consumers, not less. It is worth noting that international oil and gas operators active in China are free to export their share of production anywhere in the world, or sell into the domestic market.
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We also wanted to send a very clear message about jobs, so our second commitment is that Cnooc will seek to retain substantially all Unocal employees, especially those in the U.S. We think Unocal has attractive and efficient operations and a high quality team. Our merger, unlike Chevron's, is not based on rationalization and cost cutting. As a result it will save a great many American jobs.
Finally, we will sell or place into special management arrangements any pipeline, gas storage, terminals and other midstream assets that might raise concerns in the CFIUS process. Unocal has a relatively small portfolio of midstream assets, which include its 22% interest in the Colonial Pipeline and its less than 2% interest in the Trans Alaska Pipeline. While other foreign entities own significantly larger stakes in even more critical U.S. energy infrastructure such as refineries, we believe, as long as a divestiture or CFIUS-approved management structure for the assets at issue doesn't damage Unocal's business, that these assets are not core to the shareholder value we can create with this merger.
At the heart of our commitment is the CFIUS process. We recently filed a notice so that CFIUS could begin to review our proposal. In preparing our bid, Cnooc always planned to voluntarily seek CFIUS review. I respect the concerns the process seeks to address and believe that a successful review can help build even stronger trading ties that are so vital to our two countries.
I know that operating a business in the U.S. is a complex undertaking. Only the companies with the best management teams are able to survive and prosper. Thus, Cnooc will make every effort to persuade the members of Unocal's executive and operations management team to join the combined company. Unocal has more than 100 years of experience in the U.S., and the combined company will benefit from that knowledge. We know their people well and respect them as some of the best in the industry. We, too, have a 20-year track record of working with other international businesses, integrating teams from different countries into effective cross-border joint ventures. With the Unocal team alongside, us I am confident we will build a compelling business.
I know that debate about our offer will continue. I am conscious that in some ways that Cnooc is helping show the American people the face not just of our business, but of the changing nature of corporate China. The best way we can do that is by being open and responsive to people's concerns, and by ensuring that they see the careful, transparent standards of shareholder discipline that we apply to a situation like this.
Our company has grown shareholder value from a market cap of $6 billion when it listed four years ago, to $25 billion today. I will continue to focus on bringing value to Cnooc shareholders and am convinced that the acquisition of Unocal can help us. I will also be focused on providing our better offer for Unocal shareholders, bringing oil and jobs to the United States, and on our assurances that we will be an open and responsible participant in the process.
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Mr. Fu is chairman and CEO of Cnooc Ltd.
Document AWSJ000020050705e17600001
More Like This
By Fu Chengyu
1,504 words
6 July 2005
The Asian Wall Street Journal
A11
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
Two weeks ago, our company, Cnooc Ltd., extended a friendly, all-cash offer to Unocal's board of directors. After being invited to engage in dialogue with Unocal earlier this year, we entered detailed negotiations regarding a possible merger. We have made our offer because Unocal's asset base -- 70% of its oil and gas reserves are close to Asian markets where we operate -- fits our business extremely well. We are listed on the New York and Hong Kong Stock Exchanges and have fiduciary obligations to all of our shareholders. We believe this merger will offer our shareholders, which include many leading U.S. institutional investors, tremendous growth opportunities.
The majority of Unocal's Asian reserves are gas. Its proven reserves are mostly committed to long-term contracts in the region, notably for domestic gas markets in Thailand and Bangladesh. Unocal also has very substantial gas resources -- or unbooked reserves -- particularly offshore East Kalimantan, Indonesia, which will be developed for the production of Liquefied Natural Gas (LNG). Although Cnooc will have no direct influence over the marketing of the LNG, since this is conducted by Indonesian state-owned entities, it is expected that the clean-burning LNG will be sold primarily into Asian markets.
We also believe that our two companies can bring even more oil and gas to the U.S. market by building on Unocal's strength in the Gulf of Mexico and other producing areas in the U.S. Last year, Cnooc grew production of oil and gas by over 7%. Over the past three years, we achieved an average reserve replacement ratio of about 213%, one of the best records in the industry.
We have partnered with many leading oil and gas companies in a significant number of projects in China and elsewhere in the world. An example is the memorandum of understanding we have signed with Chevron to participate in the Gorgon LNG project in Australia which is expected to supply LNG both to China and the U.S. Of course, sometimes we compete with these companies as well -- in this case with Chevron for Unocal. That is because we are both trying to pay the best price, for a good business. I adhere to the belief that the highest price wins. Given that our bid is about 11% -- or $2 billion -- higher than Chevron's stock-and-cash deal as of today, this competition also benefits Unocal's shareholders, in addition to our own. The bottom line is that our all-cash offer puts more dollars in the pockets of shareholders and is not subject to the daily fluctuations and uncertainty of the stock market.
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There has been huge change in China in recent years, as more and more businesses have learned to focus on proper financial management and corporate governance disciplines. Cnooc is recognized for being well ahead of most of them, however. We are a listed company, with half of our eight-member board composed of non-executive independent directors. Our parent company has been a leader in the development of the oil and gas industry in China since its formation in 1982. It is investment-grade credit-rated, has net cash on its balance sheet and is highly profitable.
Furthermore, ours is a business run by professional business people. Most of the team here, including me, have been in the oil and gas industry throughout our careers. We are also very international in our approach. We have been working in joint ventures with other leading oil companies for 20 years. After my masters degree at the University of Southern California, I spent 13 years working with international oil companies, many of them U.S. oil companies. When I led Phillips' joint venture with Cnooc in China, we had 200 expatriate employees working alongside 200 Chinese. That was a very positive experience, and I want to share with you my great personal pride at the thought of leading a similar effort to combine the talents of an American and Chinese company. I am therefore very pleased that Cnooc and Unocal have begun discussing the merits of our offer and I hope we can reach an agreement on a consensual transaction in the near future.
We have recently filed with the Committee on Foreign Investment in the United States (CFIUS) and look forward to entering discussions with them and answering all their questions as soon as possible. We are prepared to agree necessary modifications to our proposal in order to alleviate any concerns they may have.
When my company's board authorized the offer for Unocal, I knew that the transaction would create great interest -- and even concern. That is why we set out straight away, to address those concerns with up-front commitments surrounding our deal.
The most fundamental point of concern that we face is that American oil and gas should stay in America -- and I promise that we will continue Unocal's sales practice of selling all, or substantially all, U.S. oil and gas in U.S. markets. The American public's anxiety -- that we plan to take fuel back to China -- is based on a misunderstanding. It would not be economically rational to take U.S. oil and gas to China -- not least, as the U.S. is one of the strongest markets in the world. In fact we will increase production in the U.S., particularly from the Gulf of Mexico. That will mean more oil for U.S. consumers, not less. It is worth noting that international oil and gas operators active in China are free to export their share of production anywhere in the world, or sell into the domestic market.
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We also wanted to send a very clear message about jobs, so our second commitment is that Cnooc will seek to retain substantially all Unocal employees, especially those in the U.S. We think Unocal has attractive and efficient operations and a high quality team. Our merger, unlike Chevron's, is not based on rationalization and cost cutting. As a result it will save a great many American jobs.
Finally, we will sell or place into special management arrangements any pipeline, gas storage, terminals and other midstream assets that might raise concerns in the CFIUS process. Unocal has a relatively small portfolio of midstream assets, which include its 22% interest in the Colonial Pipeline and its less than 2% interest in the Trans Alaska Pipeline. While other foreign entities own significantly larger stakes in even more critical U.S. energy infrastructure such as refineries, we believe, as long as a divestiture or CFIUS-approved management structure for the assets at issue doesn't damage Unocal's business, that these assets are not core to the shareholder value we can create with this merger.
At the heart of our commitment is the CFIUS process. We recently filed a notice so that CFIUS could begin to review our proposal. In preparing our bid, Cnooc always planned to voluntarily seek CFIUS review. I respect the concerns the process seeks to address and believe that a successful review can help build even stronger trading ties that are so vital to our two countries.
I know that operating a business in the U.S. is a complex undertaking. Only the companies with the best management teams are able to survive and prosper. Thus, Cnooc will make every effort to persuade the members of Unocal's executive and operations management team to join the combined company. Unocal has more than 100 years of experience in the U.S., and the combined company will benefit from that knowledge. We know their people well and respect them as some of the best in the industry. We, too, have a 20-year track record of working with other international businesses, integrating teams from different countries into effective cross-border joint ventures. With the Unocal team alongside, us I am confident we will build a compelling business.
I know that debate about our offer will continue. I am conscious that in some ways that Cnooc is helping show the American people the face not just of our business, but of the changing nature of corporate China. The best way we can do that is by being open and responsive to people's concerns, and by ensuring that they see the careful, transparent standards of shareholder discipline that we apply to a situation like this.
Our company has grown shareholder value from a market cap of $6 billion when it listed four years ago, to $25 billion today. I will continue to focus on bringing value to Cnooc shareholders and am convinced that the acquisition of Unocal can help us. I will also be focused on providing our better offer for Unocal shareholders, bringing oil and jobs to the United States, and on our assurances that we will be an open and responsible participant in the process.
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Mr. Fu is chairman and CEO of Cnooc Ltd.
Document AWSJ000020050705e17600001
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The Talent Behind `China Inc.'
By Thomas Hout and John Wong
866 words
7 July 2005
The Asian Wall Street Journal
A11
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
A stereotype is forming around China's acquisitions in the U.S. -- buy fast rather than build slow. Lenovo's buyout of IBM's PC unit, TCL's buyout of France's Thomson and with it RCA, and now Haier's bid for Maytag all suggest that China is in a hurry to go global and will freely spend low-cost money to acquire our brands and distribution access, plus secure an outlet for their low-cost products made in China.
The problem with this view is that China's most successful acquisitions to date in the U.S. have little to do with China's low-cost money and workers or buying our brands. They are instead all about Chinese management skill and U.S. workers. These no-name Chinese acquisitions are turn-arounds founded on hard-nosed Chinese business practices, and they import less product from China than most U.S. manufacturers do.
Haier in fact doesn't fit the mold either. It has spent 10 years building its own brand in the U.S. and now has its name on 10% of new U.S. refrigerator sales. Large units, too expensive to ship from China, are made in the U.S. Haier succeeded by partnering with a young, market-savvy U.S. entrepreneur, Michael Jemal, who created down-market, niche refrigerator products that the big U.S. brands ignored and won its own distribution access by customizing products for the big box retailers. Haier's bid for Maytag is a turn-around play premised on Haier's proven management practices. Otherwise, sophisticated co-investors like Blackstone and Bain Capital would not be aboard.
Chinese companies that are successfully building slow in the U.S. include Wanxiang and China International Marine Container (CIMC). Wanxiang Group, China's leading auto-parts maker, tried to export auto parts from China to the U.S. but found itself underpriced by Polish and Romanian imports. So it adopted a private equity role in building a U.S. business: it joint ventures or acquires stakes in struggling U.S. manufacturers, then restructures their management and operations based on what Wanxiang learned in China. The Group now has equity positions in over 30 auto-parts companies world-wide, and its U.S. sales of nearly $400 million are more profitable than its business back home.
CIMC may be the world's least visible globally dominant company, making 40% of all shipping containers. In the 1990s it consolidated South China's big container business -- much like GM rolled-up U.S. autos in the 1930s -- by buying up smaller local producers with non-voting stock, then rationalized production among these subsidiaries. Only then did CIMC acquire a U.S. truck-trailer maker from a bankrupt parent and turn it around, using Chinese-made container components and factory floor technology.
Chinese management is an under-rated asset in American discussions of China's global strategy. Almost all large successful companies in China are turn-arounds of formerly politically managed state-owned enterprises. The managers who took them over during the 1980s and 1990s reforms had to learn what any turn-around specialist does -- flatten layers, fire the pretenders, prune losing businesses, and hammer operating costs down. The CEOs of Haier, Wanxiang, and CIMC all started and spent their careers on the factory floor. China's low-cost mentality is just as much about cheap management as about cheap labor.
So it makes sense that China's first and surest global companies will be in mid-tech or modest brand businesses built on ground-level operating skills, opportunism, and local partnerships -- not high-profile consumer brands or high tech. These proven Chinese strengths also play perfectly to deep changes going on in the U.S. economy -- revitalization of distressed small manufacturers through new partnerships, private equity's growing role, and even lower income consumers' trading-down to lower-priced household durables.
Not all Chinese companies, however, think they have the time to build slow. Lenovo and TCL are in fast-moving businesses where strong global competitors are breathing down their neck in China -- especially, Dell, Samsung, Nokia and Motorola. Computers, flat-screen televisions, cell phones, and mobile consumer electronics devices of all kinds may be made in China but controlled by multinationals there who are pulling away from Chinese competitors.
This issue of pace is a problem for China. Product and marketing innovation is rooted in close contact with customers and close collaboration with adjacent, complementary technologies. Chinese state-owned companies have typically been separated from end customers by government-controlled distribution intermediaries. The result is China doesn't have what Silicon Valley and other innovation clusters have -- diffusion of knowledge horizontally and movement of technologists between firms.
Too much can be expected of China's high-profile companies now. The early rounds of Chinese globalizing favor less glamorous, hard-nosed Chinese companies who have a lot to offer to industrial America right now.
---
Mr. Hout is a senior adviser and Mr. Wong is senior vice president at The Boston Consulting Group's Hong Kong office.
Document AWSJ000020050706e1770001h
More Like This
By Thomas Hout and John Wong
866 words
7 July 2005
The Asian Wall Street Journal
A11
English
(c) 2005 Dow Jones & Company, Inc. To see the edition in which this article appeared, click here http://awsj.com.hk/factiva-ns
A stereotype is forming around China's acquisitions in the U.S. -- buy fast rather than build slow. Lenovo's buyout of IBM's PC unit, TCL's buyout of France's Thomson and with it RCA, and now Haier's bid for Maytag all suggest that China is in a hurry to go global and will freely spend low-cost money to acquire our brands and distribution access, plus secure an outlet for their low-cost products made in China.
The problem with this view is that China's most successful acquisitions to date in the U.S. have little to do with China's low-cost money and workers or buying our brands. They are instead all about Chinese management skill and U.S. workers. These no-name Chinese acquisitions are turn-arounds founded on hard-nosed Chinese business practices, and they import less product from China than most U.S. manufacturers do.
Haier in fact doesn't fit the mold either. It has spent 10 years building its own brand in the U.S. and now has its name on 10% of new U.S. refrigerator sales. Large units, too expensive to ship from China, are made in the U.S. Haier succeeded by partnering with a young, market-savvy U.S. entrepreneur, Michael Jemal, who created down-market, niche refrigerator products that the big U.S. brands ignored and won its own distribution access by customizing products for the big box retailers. Haier's bid for Maytag is a turn-around play premised on Haier's proven management practices. Otherwise, sophisticated co-investors like Blackstone and Bain Capital would not be aboard.
Chinese companies that are successfully building slow in the U.S. include Wanxiang and China International Marine Container (CIMC). Wanxiang Group, China's leading auto-parts maker, tried to export auto parts from China to the U.S. but found itself underpriced by Polish and Romanian imports. So it adopted a private equity role in building a U.S. business: it joint ventures or acquires stakes in struggling U.S. manufacturers, then restructures their management and operations based on what Wanxiang learned in China. The Group now has equity positions in over 30 auto-parts companies world-wide, and its U.S. sales of nearly $400 million are more profitable than its business back home.
CIMC may be the world's least visible globally dominant company, making 40% of all shipping containers. In the 1990s it consolidated South China's big container business -- much like GM rolled-up U.S. autos in the 1930s -- by buying up smaller local producers with non-voting stock, then rationalized production among these subsidiaries. Only then did CIMC acquire a U.S. truck-trailer maker from a bankrupt parent and turn it around, using Chinese-made container components and factory floor technology.
Chinese management is an under-rated asset in American discussions of China's global strategy. Almost all large successful companies in China are turn-arounds of formerly politically managed state-owned enterprises. The managers who took them over during the 1980s and 1990s reforms had to learn what any turn-around specialist does -- flatten layers, fire the pretenders, prune losing businesses, and hammer operating costs down. The CEOs of Haier, Wanxiang, and CIMC all started and spent their careers on the factory floor. China's low-cost mentality is just as much about cheap management as about cheap labor.
So it makes sense that China's first and surest global companies will be in mid-tech or modest brand businesses built on ground-level operating skills, opportunism, and local partnerships -- not high-profile consumer brands or high tech. These proven Chinese strengths also play perfectly to deep changes going on in the U.S. economy -- revitalization of distressed small manufacturers through new partnerships, private equity's growing role, and even lower income consumers' trading-down to lower-priced household durables.
Not all Chinese companies, however, think they have the time to build slow. Lenovo and TCL are in fast-moving businesses where strong global competitors are breathing down their neck in China -- especially, Dell, Samsung, Nokia and Motorola. Computers, flat-screen televisions, cell phones, and mobile consumer electronics devices of all kinds may be made in China but controlled by multinationals there who are pulling away from Chinese competitors.
This issue of pace is a problem for China. Product and marketing innovation is rooted in close contact with customers and close collaboration with adjacent, complementary technologies. Chinese state-owned companies have typically been separated from end customers by government-controlled distribution intermediaries. The result is China doesn't have what Silicon Valley and other innovation clusters have -- diffusion of knowledge horizontally and movement of technologists between firms.
Too much can be expected of China's high-profile companies now. The early rounds of Chinese globalizing favor less glamorous, hard-nosed Chinese companies who have a lot to offer to industrial America right now.
---
Mr. Hout is a senior adviser and Mr. Wong is senior vice president at The Boston Consulting Group's Hong Kong office.
Document AWSJ000020050706e1770001h
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