Doing business in China: June 2007 Archives

By Sharon Silke Carty | USA Today
June 26, 2007

The government has ordered a small New Jersey tire importer to recall 450,000 Chinese-made light-truck tires because they might come apart and cause fatal crashes, even though the importer says the costs of a recall would bankrupt it.
The tires, in sizes typically used by full-size vans, SUVs and pickups, are blamed in a fatal accident outside Philadelphia that's generated a lawsuit against Foreign Tire Sales of Union, N.J. FTS has in turn sued Hangzhou Zhongce Rubber, one of China's biggest tiremakers, which sold it the potentially faulty tires.

The National Highway Traffic Safety Administration said it told Foreign Tire on Monday to recall the tires. It would be the second recall in a year and a half involving Hangzhou Zhongce tires. In February 2006, Cooper Tire & Rubber recalled 288,000 passenger-car tires from the Chinese maker because they contained "unauthorized material" in the sidewalls. Cooper said that could have caused air leaks and, eventually, tread separation. Cooper couldn't be reached Monday night for comment.

Foreign Tire says it sold Hangzhou Zhongce tires under brand names Westlake, Compass, Telluride and YKS since 2002.

Xu Youming, an administrative manager at Hangzhou, denied that the tires had safety issues.

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By Zhang Mingkun | Central News Agency | The Epoch Times
21 June 2007

China and the U.S. held consultations in Geneva from June 5 to 8, 2007 on the protection of intellectual property in China and the market access of publications. The meeting came as the U.S. filed a request for dispute settlement with the World Trade Organization (WTO) in April, accusing China of failing to take adequate measures to protect intellectual property and against rampant pirating and copying in that land.

The U.S. is not China's only accuser; China is known in the world as the country where illegal copying is widespread. A Japanese TV program reported last month that the Beijing Shijingshan Amusement Park was suspected of copying famous cartoon characters in Disneyland in violation of intellectual property rights. Immediately after that report, several other foreign media outlets followed up, triggering a wave of media attacks on China's illegal copying.

The Japanese TV program showed that there was a man dressed as the cartoon character Tigger from Disney's Winnie the Pooh in the Shijiangshan Amusement Park, who yelled out in Pidgin English, "Five dollar one shoot," charging five yuan (US$ 0.6 dollar) from tourists who wanted to take a picture with him. He didn't know that the Tigger outfit he was wearing was unauthorized; still less was he aware that the people who came to videotape him were the crew from a Japanese TV program that had caught him red-handed.

The Shijingshan Amusement Park, just west of the fifth loop road of Beijing and built in 1986, was laid out in imitation of Disneyland with a castle in fairy tales as its trademark structure.

The Japanese TV footage revealed that staff dressed as popular cartoon figures such as Snow White, Seven Dwarfs, Tigger, Hello Kitty, Duola Ameng, to name a few, paraded in the park, charging tourists a fee for taking photos with them. They used these images without authorization from Disneyland or relevant Japanese authorities.

The program also showed that the peddlers in the park were openly displaying and selling imitated toy figures, such as Mickey Mouse, Minnie, the Clown fish in Finding Nemo, and Winnie the Pooh.

The park is only a miniature of the prevailing illegal copying problems on the streets of Beijing. Pirated goods in mainland China are flourishing thanks to their cheap prices; one pirated DVD movie costs only five yuan (US$ 0.6 dollar), which makes buying the authenticated version at a price ten or even twenty times higher much less attractive. Some people do not even want to pay for a copied DVD; instead, they opt for downloading free movies from the Internet.

People in China cannot care less about intellectual piracy. Westerners or Japanese tourists "do in Rome as the Romans do" too; they do not hesitate to buy copied goods when they come to China. One Beijing resident, a regular guide for foreign tourists, said, "When foreigners first came, they all appeared to feel disgusted with the copied goods. But later they changed, and bought a lot of them."

According to statistics published by the European Commission on May 31, 2007, about 80 percent of the copied goods seized by the customs in the European Union come from China.

In response to the serious intellectual piracy problems in China, the U.S. officially filed a report with the WTO in April, and it underscored that Americans' dissatisfaction has risen to the verge of a trade war.

Wang Guangze, a China commentator, said, "China has a serious intellectual piracy problem, so the U.S. indeed has the right to complain to the WTO. Since China has joined the WTO, it has a responsibility to address the ongoing illegal copying problems in its territory."

Ultimately, who is to blame for this stubborn problem of intellectual piracy in China? Wang hit the nail on the head when he said, "Neither the U.S. nor the WTO, nor the Chinese people are at fault. The only party that's at fault is the government in China."

By David Barboza | The New York Times
09 June 2007

A dispute between Groupe Danone, the French dairy and beverage maker, and its Chinese partner, the beverage maker Wahaha, became even stranger on Friday when Wahaha released several letters written by employees that denounced Danone for being run by “rascals” who were committing “evil deeds.”

The letters, which were filled with vitriol and old-fashioned Communist slogans, came a day after the founder and chairman of Wahaha, Zong Qinghou, resigned in anger, saying that his reputation was being ruined by the dispute.

The resignation had appeared to be a victory for Danone, which is trying to gain control of the venture. On Thursday, Danone named Emmanuel Faber, the head of its Asian operations, as the interim chairman of Wahaha.

But by Friday, there were indications that Wahaha was still being controlled by Mr. Zong or a management team loyal to him.

A spokesman for Danone declined to comment.

Mr. Zong, an entrepreneur who has been ranked as one of China’s wealthiest individuals, could not be reached for comment on Friday.

But Danone’s dispute with its joint venture partner is turning into an increasingly nasty affair, complicating the company’s control over one of its biggest and most lucrative investments in China, a beverage maker with sales of more than $1.4 billion a year.

The dispute erupted this year after Danone, which owns 51 percent of the Wahaha joint venture that was founded in 1996, accused Mr. Zong of operating mirror companies that independently sold goods in China under the Wahaha brand name and then pocketing huge profits.

But Mr. Zong has insisted that Danone executives knew about the affiliated companies and even audited them. He said Danone was seeking to acquire most of them but was unwilling to pay a hefty price, setting off the dispute.

Earlier this year, Danone imposed a deadline on its Wahaha partner to stop the companies from selling Wahaha products outside of the joint venture company.

On Monday, after that deadline had passed, Danone filed a lawsuit in the United States against one of Mr. Zong’s Wahaha-affiliated companies, claiming that Danone had been cheated out of at least $100 million.

The target of the lawsuit was a company controlled or owned by Mr. Zong and his wife and daughter, who are listed as the company’s legal representatives and who live in California.

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