Made in (The People's Republic of) China: October 2011 Archives

By Kathrin Hille | Financial Times

24 October 2011

The world's leading software industry body warned on Monday of a jump in revenues lost to software piracy in China as the country's government is failing to rein in rampant copyright infringement.

Robert Holleyman, president and chief executive of the Business Software Alliance, said pledges by the Chinese government to help foreign companies gain more revenues from software sales in China and high-profile anti-piracy campaigns had failed to deliver.

"All that activity led us to believe that we'd see some fairly rapid reduction of software piracy in China," Mr Holleyman said. "But none of what I've picked up with our companies indicates that they're seeing the kind of economic growth associated with the sales of software."

The remarks indicate that software market opportunities for companies such as Microsoft are unlikely to keep up with the pace of China's PC market growth, and that intellectual property rights infringement will remain an irritant in relations with the US and China's other leading trading partners.

In late 2010, the Chinese government, responding to growing criticism of its intellectual property rights protection record, promised in talks with the US that it would help increase foreign companies' software sales in the country.

Since last year, Beijing has also been running a high-profile crackdown on the production and sales of pirated goods. The duration and scale of the campaign initially gave rise to cautious optimism among foreign industry executives that real change could be on the cards.

The US government even expressed cautious optimism in its annual report on intellectual property rights protection, saying Beijing's special campaign against piracy might lead to "lasting improvements".

But Mr Holleyman said: "While [piracy as a] percentage of total software sales is coming down somewhat, the US$ losses are exploding." He added that he expected multinational software companies to launch more legal action against Chinese counterfeiters as a result.

In China, 78 per cent of all software sold in 2010 was pirated, according to BSA's 2011 Global Piracy Report, compared with a global average piracy rate of 42 per cent. While this is not among the world's highest piracy rates, China created the second-highest economic damage through piracy as the industry lost $7.8bn in revenues to pirates last year. In the US, the damage was $9.5bn.

But China is expected to overtake the US in that ranking soon as it is set to surpass the US as the world's largest PC market by unit shipments next year.

>> Original Source

By Daryl Loo - Bloomberg-Businessweek

October 2011

The government tobacco maker sponsors schools, earning goodwill

Chinese kids smoking on the outskirts of Shaoyang in Hunan province

Imaginechina via AP Photo

In dozens of rural villages in China's western provinces, one of the first things primary school kids learn is what helps make their education possible: tobacco. The schools are sponsored by local units of China's state-owned cigarette monopoly, China National Tobacco. "On the gates of these schools you'll see slogans that say 'Genius comes from hard work--tobacco helps you become talented,'" says Xu Guihua, secretary general of the Chinese Association on Tobacco Control, a privately funded lobbying group. "They are pinning their hopes on young people taking up smoking."

Anti-tobacco groups say efforts in China to reduce sales, including a ban on smoking in public places introduced in May, have been hampered by light penalties, a lack of education about the dangers of smoking, and the fact that the regulator, the State Tobacco Monopoly Administration, also runs the world's biggest cigarette maker.

While Chinese law bans tobacco advertising on radio, television, and in newspapers, they "do not have clear restrictions on sales and sponsorship activities," according to a report published in January by Yang Gonghuan, a former deputy director of China's Center for Disease Control & Prevention, and Tsinghua University professor Hu Angang. Regional units of the monopoly funded construction of more than 100 primary schools throughout China, such as the Sichuan Tobacco Hope Primary School, the official Xinhua News Agency reported in May. Some schools are named after local tobacco companies such as Hongta or top-selling cigarette brands like Zhongnanhai, named after the compound next to the Forbidden City where China's top leaders live and work. The state tobacco company in September 2010 announced it was sponsoring an additional 42 primary school libraries in Xinjiang and 40 in Tibet, and in November made a ¥10 million donation to a women's development fund for a "Healthy Mothers' Express" campaign.

China National Tobacco lists charitable activities on its website. In a survey of more than 2,000 adults conducted in 2009 by the Association on Tobacco Control, 7 percent had a good impression of the tobacco industry due to its charity work, while 18 percent said they would pick a cigarette brand because of its good works. State Tobacco's press office didn't respond to interview requests or faxed questions about sponsorship.

China has more than 320 million smokers, a third of the world's total, and 53 percent of men there smoke. About 1 million Chinese die from tobacco-related illnesses every year. The tobacco industry grew at an average annual rate of 19 percent from 2006 to 2010, according to State Tobacco. Last year, earnings rose 17 percent, to ¥605 billion ($95 billion), including ¥499 billion paid in taxes.

China created the tobacco monopoly in the 1980s, when the industry supplied more than 10 percent of government revenue. Today, tobacco contributes 6.7 percent, according to Yang and Hu's report. "Especially in tobacco-growing provinces like Yunnan and Guizhou, the tobacco industry is a very important part of local government income," says Wang Shiyong, the World Bank's senior health specialist in Beijing. "There is a lot of internal government lobbying to make sure the health consequences of smoking are not addressed."

A government survey in 2010 found that two in five male doctors light up every day in China. (PFE)Pfizer, whose Champix is the main prescription anti-smoking drug sold in China, funded a three-year program in 2008 to set up 60 smoke-free hospitals in Beijing, Shanghai, and Guangzhou. Smoking among the hospitals' leadership fell to 8.4 percent, from 19.1 percent, while overall rates for doctors fell to 6.8 percent from 10.7 percent, says Pfizer spokeswoman Neena Moorjani.

Still, the education drives have a long way to go. Only one in four adults in China believe exposure to tobacco smoke causes heart diseases and lung cancer, and the percentage among smokers is even lower--22 percent--according to the 2010 Global Adult Tobacco Survey for China.

"We've been trying to get the Ministry of Education to stop the tobacco companies from sponsoring these schools," says Xu, a former deputy director at the Chinese Center for Disease Control & Prevention. "But the ministry wants us to show them proof that this is causing harm."

The bottom line: China's tobacco monopoly funds schools. About 18 percent of Chinese say they'd pick a cigarette brand because of its charitable works.

>> Original Source

By Radio FREE Asia

October 11, 2011

Residents of southern China say a planned battery factory could poison local water supplies.

Residents of the southern Chinese city of Shenzhen are mounting a vocal campaign against plans to build a battery plant in their neighborhood, following a slew of cases of lead poisoning in children across the country in recent months.

The plant is scheduled to be built, beginning next year, by China's BYD Group, which numbers among its shareholders U.S. market guru Warren Buffett. If it goes ahead, it will export state-of-the-art rechargeable batteries around the world.

But residents of Shenzhen, a city of 10 million people, say they are concerned that it sits too close to reservoirs which supply the city with drinking water.

They say BYD has already sparked pollution concerns at some of its other Shenzhen facilities.

A private homeowner in Shenzhen's Longgang district surnamed Li said people in his neighborhood have been complaining for two years about foul smells issuing from an industrial plant also run by BYD, but without result.

"We have complained many times, and every time the environmental protection department knows it's coming from BYD as soon as they get our call," Li said.

"They are lagging behind on a number of [environmental] standards," he said. "They have been tested a number of times, and told they have passed, but that they have to make improvements."

"I don't understand this ... because a lot of elderly people and children from our residential complex have been feeling unwell, and have gone to the hospital to get treatment."

A local spokeswoman for the environmental group Greenpeace surnamed Jiang said the Longgang BYD plant was known to be emitting pollution into the atmosphere.

Local media have reported a sharp rise in patients in recent months at the nearby medical clinic.

An employee who answered the phone at the plant said he hadn't heard of any complaints from local residents, and that no one had reported any sickness as a result of its emissions recently.

Environmental crisis

Chinese officials have warned that the country is facing a "grave" environmental crisis, with more than half its cities affected by acid rain and one-sixth of its major rivers too polluted even to water crops with.

Three decades of breakneck economic growth have taken their toll on the country's natural resources, sparking a huge increase in public unrest linked to environmental degradation and health problems caused by pollution.

BYD announced the plans to build what it calls "the worlds' largest battery plant" in May, following a surprise change to zoning regulations on the plot of land it owned.

According to an April report issued by China's cabinet, the State Council, BYD planned to invest more than 8.2 billion yuan (U.S. $1.3 billion) in its "new energy" projects, including 7.8 billion yuan (U.S. $1.2 billion) on the lithium ion battery plant in Shenzhen, and 372 million yuan (U.S. $58.1 million) on a solar cell facility.

A Shenzhen resident and protester surnamed Zhou said the plot of land earmarked for the plant lay between the Bingkeng, Tongluojing and Sanzhoutian reservoirs, amid a network of channels supplying water to Shenzhen.

"Two of those reservoirs supply drinking water to us here in Shenzhen," Zhou said. "I heard that there would be a lot of heavy metals involved in a battery plant ... which [raises questions about] environmental protection."

"This is a huge hidden danger: a time bomb," he said. "That is why those of us who live nearby are very worried."

Lead poisoning

Battery makers and lead and zinc smelting plants have been blamed for a wave of lead poisoning cases affecting thousands of children across China in recent years, sometimes sparking violent protests.

And Chinese children who suffer lead poisoning as a result of industrial pollution are frequently sent back to live in contaminated environments and refused treatment, according to a recent report by the New York-based Human Rights Watch (HRW).

The plans for the plant are causing great concern and widespread speculation, local people said in recent interviews.

A residential landlord surnamed Yin said there were currently a large number of residential blocks under construction in the area around the proposed BYD plant, which would provide homes for up to 100,000 people when they were finished.

"A lot of people are talking about this now, and the key factor is the battery plant," Yin said. "Recently a customer took a liking to an apartment, but they are now waiting to see whether the battery plant goes ahead before they buy it," he said.

Ordinary Chinese people are becoming increasingly active in support of environmental issues in recent years.

Shenzhen-based rights activist Xiao Chun said an growing number of ordinary Chinese were now prepared to stand up for the environment.

"The residents of Shenzhen are standing up one by one to protect their own environment," Xiao said. "This sort of courage on their part will contribute to a better society."

"The government should back them up, not suppress them," he said.

Moves to cut down some of Nanjing's iconic "wutong" trees sparked protests in the eastern city ahead of the G20 international monetary conference in March.

And thousands gathered in the northeastern port city of Dalian in August to call on the government to close down a petrochemical plant that made paraxylene (PX), a toxic and carcinogenic substance.

The protests, which resulted in a promise to close the plant from the city's leaders, echoed a similar movement in the southeastern port city of Xiamen in 2007, when the municipal government backed down on a planned PX plant following massive popular anger and demonstrations.

Reported by Bi Zimo and Wen Yuqing for RFA's Cantonese service. Translated and written in English by Luisetta Mudie.