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Issue 585 03-09-2012
Summary:Shandong to Pilot Barring Home Pre-sales, Billionaire Sues Yunnan Hongta Group and Restrictions on Foreign Companies in Seed Sector.

Highlights from the EO print edition, No. 585, Sep 03, 2012

Shipowners Call for New Policies to Save Sinking Shipping Industry
News, page 2
~ Captain Wei Jiafu (魏家福), the chairman and party secretary of China Ocean Shipping (Group) Company, the parent of the listed China Cosco Holdings Company Limited (China Cosco) and the largest integrated shipping company in China, apologized to investors last week when Cosco's listed subsidary reported huge losses for the first half of the year.
~ The company registered losses of 4.87 billion yuan in the first half of the year, down almost 80 percent on last year's results and following losses of 10.45 billion for the full year last year.
~ Captain Wei also said that the situation was "very grim," and explained how he had been writing a lot of letters to the government, urging them, as the major shareholder in the company, to offer more support.
~ Aside from the Captain Wei's letter-writing campaign, the EO has learned that China Shipowners' Association (中国船东协会) is also preparing to lobby the Ministry of Transport with a series of policy recommendations aimed at easing pressure on shipowners.
~ According to reports, the recommendations will include moves to limit the operating life of container ships in order to reduce current problems related to excess capacity in the industry, engaging in discussions with steel companies who have set up their own shipping fleets to try and the reduction of various fees and taxes.
~ Wei Jiafu is facing an even more serious challenge: if he can't stem the losses of Cosco's listed arm in the second half of this year, the company faces the prospect of being labeled as "ST" or special treatment stock and could be delisted if the situation doesn't improve.
Original article: [Chinese]

Shandong to Pilot Barring Home Pre-sales
News, page 4
~ Shandong will pilot a new requirement for real-estate developers barring them from pre-selling homes before construction is complete. The Ministry of Housing and Urban-Rural Development (MOHURD) has been recommending the policy for years.
~ The policy is to prevent developers from absconding with money or diverting it to other uses before a project is even complete. This has been a problem particularly in Qingdao of Shandong Province, where over the past year some developers have abandoned projects after already receiving significant down payments from home buyers.
~ The pilot has been delayed for several years because it will bring financial pressure to developers. But more importantly, local governments are hesitant to adopt the policy because a sluggish real estate industry will reduce the fiscal revenue derived from land sales and taxing home-buyers and developers.
~ However, the current gloomy economic situation offers a good opportunity to pilot this policy since developers are having difficulty even marketing completed units.
Original article: [Chinese]

China Tightens Seed Industry Regulation
News, page 7
~ According to a source close to the Ministry of Agriculture, in the new round of seed industry reforms, wholly foreign-owned enterprises will continue to be barred from investment in grain and cotton seeds. Meanwhile, joint ventures investing in the field must be Chinese-controlled.
~ China has also tightened the checking process for the research, development and production of agricultural seeds like vegetables. Wholly foreign-owned enterprises are forbidden from investing in the research and development of genetically modified organisms and the production of genetically modified agricultural seeds.
~ In the past, international seed industry giants in China such as Monsanto, DuPont Pioneer and Syngenta set up many agricultural production seed companies - both individually and with Chinese partners. In terms of genetically modified technology, they also founded their own independent biological technology research centers.
~ With the new round of seed industry reforms, these companies have to adjust their strategies and increase cooperation with China in research and development and technology transfer.
Original article: [Chinese]

Number of Temporary Residents in Beijing Fell by 600,000 in 2011
Nation, page 12
~ Recently, data released by Beijing Municipal Statistics Bureau revealed that in 2011, the city's temporary resident population (暂住人口) was 8.3 million, 600,000 less than the figure recorded in 2010.
~ This is the first annual decline in the number of temporary residents since Beijing started began keeping detailed data.
~ Wang Qiyan (王琪延), a professor from Renmin University, said that due to an adjustment in Beijing's economic structure, economic growth has slowed and demand for migrant workers has fallen.
~ This economic slowdown has also caused incomes to fall and the cost of living to increase, which has also encoraged some people to leave the capital.
~ In addition, various policies that restrict non-permanent residents from purchasing property and cars has also contributed to the population shift.
~ Beijing's overall population still continued to grow in 2011, officially surpassing 20 million people for the first time.
Original article: [Chinese]


Billionaire Sues Yunnan Hongta Group
Corporation, page 29
~ Chen Fashu (陈发树), the richest man in Fujian, chairman of New Huadu Industrial Group, (新华都集团) and the sole backer of the New Huadu Charity Fund (新华都慈善基金), is once again attracting attention in China, but this time it's not because he's topped the list of China's wealthiest or donanted a large amount of money to charity, it's because he's taking one of China's best-known tobacco companies to court.
~ The case is not complicated. In 2009, Chen spent 2.2 billion yuan and purchased a 12 percent stake in the Yunnan Baiyao Group (云南白药), a subsidiary of the Yunnan Hongta Group (云南红塔集团) that among other interests also makes toothpaste. The contract stipulated that the deal required approval from China National Tobacco Corporation (China Tobacco), the largest single manufacturer of tobacco products in the world and parent company of Yunnan Hongta. The contract also stated that the Hongta Group had to inform Chen in a timely fashion if the deal was rejected.
~ In early 2012, China Tobacco rejected the deal on the grounds that is wanted to "prevent the loss of state-owned assets."
~ Chen decided to sue Hongta Group because the company hadn't informed him of the rejection in a timely manner.
~ Over the past three years, the value of the shares Chen had purchased has increased to more than 5.2 billion yuan.
~ Chen has also filed a suit against China Tobacco because, according to a notice released by the Ministry of Finance in 2004, the ministry is the only body authorized to reject the deal.
~ The Yunnan Supreme People's Court began hearing the case on August 23, as of the EO going to print, no verdict had been announced.
Original article: [Chinese]


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