Tuesday, July 10, 2012

544 Chinese investors snap up German industry, and Australia's biggest Cotton farm


Chinese investors snap up German industry, and Australia's biggest
Cotton farm

(1) Chinese investors snap up German industry, seeking to acquire
'German quality'
(2) China buys Cubbie Station, outback Cotton farm with Australia's
biggest irrigation licence
(3) Cubbie Station can grow 200 square kms of irrigated cotton (77 sq miles)
(4) National Party's Barnaby Joyce says the sale is a betrayal of the
national interest
(5) Qantas - Australia's Flying Kangaroo - is in danger of becoming roadkill
(6) China becomes world's wealthiest state (2009)
(7) China ups lobbying game, but faces key tests in U.S., Canada
(8) Hillary visits Pacific Islands Forum to counter to China's growing
influence in South Pacific

(1) Chinese investors snap up German industry, seeking to acquire
'German quality'


http://www.globalpost.com/dispatch/news/regions/europe/germany/120828/chinese-investors-snap-german-industry

Chinese investors snap up German industry

The legendary German Mittlestand is opening to investment, but some
worry its successful culture may be threatened.

Sumi Somaskanda August 30, 2012 06:00

BERLIN, Germany — When a leading maker of high-tech cement pumps here
met China’s largest heavy construction equipment company, it was love at
first sight.

“It was a perfect match,” says Norbert Scheuch, CEO of the German
company Putzmeister, of its $450 million sale to the Sany Group in
January. “Usually you have to restructure — something doesn’t fit quite
right and you have to make adjustments. But that wasn’t the case.”

The merger is believed to have been the largest ever between the two
countries. It may not be for long: It’s part of a growing trend that may
change the culture of a sector that has traditionally been wary of
outsiders.

Chinese investors are on a shopping spree in Germany, and in one sector
in particular: the legendary Mittelstand — small and mid-sized
companies, many of them family-owned, that provide the backbone of
Europe’s strongest and wealthiest economy.

Described as the country’s hidden champions in the land of BMW and
Siemens, Mittelstand companies employ more than 60 percent of the German
workforce. Most manufacture niche technologies or obscure products in
great demand, not least in that other economic powerhouse China, one of
Germany’s most important markets.

Peter Englisch, an analyst at Ernst and Young who works with Mittelstand
businesses, calls them “part of German culture.”

“They prefer to become market leaders in niche markets instead of simply
going after short-term growth,” he says.

From wire fasteners for champagne bottle tops to machinery, automotive
parts and more, Mittelstand’s products help make Germany one of the
world’s largest exporters.

The definition of a Mittlestand company isn’t exact. Originally a term
for companies employing up to 250 people generating annual revenues of
up to $60 million, it has expanded to include much larger firms
employing several thousand workers and posting profits of hundreds of
millions of dollars.

Nevertheless, Mittelstand businesses share two characteristics: they are
privately listed and have a dominant shareholder family in management.

Their steady, generally cautious approach to business helps explain why
they have carried Germany through a global financial crisis that has
crippled other European countries.

Englisch says their size also gives them flexibility. “You don’t have as
much accumulated risk as you do with a big multinational.”

Customers are willing to pay more for the “Made in Germany” brand that
promises reliability, quality and speed of delivery. Price is often no
object for manufacturers whose production can be held up if
malfunctioning equipment isn’t replaced quickly.

Those qualities are now also attracting Chinese companies seeking to
compete in global markets.

“They realized you can imitate a lot very quickly,” said Marc Tenbieg,
head of the German Mittelstand Association, of the automobile and
machine industries. “They could imitate 80 percent to perfection. But
the last 20 percent, the ‘German quality,’ they couldn’t get down.”

In the last year, Chinese companies bought concrete pump maker Schwing,
consumer electronics supplier Medion, car-door lock specialist Kiekert
and auto control systems producer Preh. Twenty-one Mittelstand companies
have found new Chinese buyers since the beginning of 2011.

Purchasing German companies enables the new owners to trade on solid,
established names useful for gaining footholds in European markets. It
also gives China access to the know-how and skills of German workers and
management.

“The Chinese have learned that building a good brand is actually much
more valuable than trying to gain as much short-term profit as
possible,” Tenbieg said.

By their nature, German Mittlestand companies have tended to fit well
into Chinese firms by plugging production gaps.

“Investors don’t have to buy large companies with many useless assets,”
said Milton Kotler of the Kotler Marketing group.

Although many Mittelstand companies were reluctant to entertain outside
bids in the past, that’s changed as the euro crisis dried up orders and
encouraged some to open their arms to Chinese suitors.

Despite the good fit in many cases, however, cultural differences
between Chinese CEOs German employees have sometimes been difficult to
overcome.

“You can have great workers, but if the cultures don’t mesh, you have a
big problem,” Tenbieg says.

But there may be larger problems for German companies.

Englisch says it’s still unclear what effect Chinese takeovers will have
on the loyalties of trusted customers and on communities in which
Mittelstand companies are located. They are often based in rural towns
or small cities where they have nurtured close ties to local populations
as well as universities and vocational schools.

“The name of the family, the reputation of the person who has run the
company for decades, who maybe inherited the business from a former
generation is important,” Englisch said. “If the local community knows
you, it probably doesn’t want you to sell to any investor who pays the
highest price and doesn’t care about the employees.”

Some warn that Chinese ownership may harm Mittlestand companies in the
long run. Kotler says Chinese state-owned companies are interested in
keeping intellectual property and know-how for themselves.

“Sany has built its own production facility in Germany,” he says. “It’s
going to maintain the Putzmeister brand, but it’s going to invest money
in building the Sany brand over Putzmeister. In time, the Sany brand
will prevail.”

Putzmeister’s Scheuch disagrees. He points to the experience of Porsche
and its new parent company Volkswagen.

“Will Porsche change because it’s now a part of the VW enterprise?” he
says. “Maybe a little in the administration, but Porsche will remain
Porsche.”

However, he admits he can’t predict Sany Group’s plans.

“There’s always danger,” he says. “But in business, if you stand still
you’ll be passed by.”

(2) China buys Cubbie Station, outback Cotton farm with Australia's
biggest irrigation licence


http://news.smh.com.au/breaking-news-national/libs-back-investment-after-cubbie-approval-20120901-256xa.html

Libs back investment after Cubbie approval

Date: September 01 2012

Frontbencher Christopher Pyne has declared the federal opposition
"obviously" supports foreign investment after Treasurer Wayne Swan
approved the sale of Australia's largest cotton grower, Cubbie Station,
to a Chinese-dominated consortium.

Under the terms of the approval, textile manufacturer RuYi - owned by
investors based in China and Japan - will initially take an 80 per cent
stake in Cubbie. That will be sold down to 51 per cent within three years.

Mr Swan says if the sale proceeds it will protect jobs and support
economic activity in the Dirranbandi and St George regions of Queensland.

Mr Pyne on Saturday appeared to back the treasurer's decision.

"Most Australians are in favour of foreign investment," he told Sky News.

"Of course they are - our country is built on foreign investment."

Earlier, opposition regional development spokesman Barnaby Joyce
labelled the sale a disgrace and accused Mr Swan of failing the community.

"Mr Swan has basically let go of Australia's biggest property," the
Nationals senator from St George told ABC Radio.

"The whole proposition now that we talk about a so-called national
interest in agriculture ... it's a farce."

Senator Joyce said Cubbie held Australia's biggest water licence and was
responsible for 10 per cent of the nation's cotton crop.

Therefore it had the capacity to "influence markets", he said.

Mr Pyne was reluctant to discuss Senator Joyce's attack, claiming he
hadn't seen the comments.

"But in principle obviously we support foreign investment in the
coalition, as does the government," he said.

A month ago Opposition Leader Tony Abbott promised to increase scrutiny
of foreign investment in Australian farms if the coalition won the next
election.

Comment on the Cubbie sale has been sought from opposition treasury
spokesman Joe Hockey.

(3) Cubbie Station can grow 200 square kms of irrigated cotton (77 sq miles)

http://en.wikipedia.org/wiki/Cubbie_StatZon

Cubbie Station, located near Dirranbandi, Australia, is the largest
privately owned (Cubbie Group) irrigation property in the southern
hemisphere.

The station was created by amalgamating 12 floodplain properties to give
Cubbie a total of 51 water licences.[1] Its huge water storage dams
stretch for more than 28 km along the Culgoa River, part of the
Murray-Darling system. In an average year the Station uses 200,000
megaliters of water, in a good year as much as 500,000 megalitres. The
managing director is John Grabbe.

The water is used to supply 130 km2 of irrigated cotton and other crops
including wheat, which brings in about $50 million a year.[2]

The station is licenced to take 460,000 megalitres.[1] It is the
equivalent of all irrigation entitlements downstream in north-western
NSW.[3] The property has the capacity to grow 200 km2 of cotton. ...

This page was last modified on 30 April 2012 at 19:30.

(4) National Party's Barnaby Joyce says the sale is a betrayal of the
national interest


http://www.abc.net.au/am/content/2012/s3580870.htm

Barnaby Joyce says Cubbie sell off a disgrace Lindy Kerin reported this
story on Saturday, September 1, 2012 08:08:00

Listen to MP3 of this story ( minutes) ALTERNATE WMA VERSION | MP3
DOWNLOAD ELIZABETH JACKSON: The Federal Government's decision to approve
the sale of Australia's largest cotton enterprise to Chinese and
Japanese investors has been described as a disgrace.

The Federal Treasurer, Wayne Swan, says the textile manufacturer Ruyi
will initially own an 80 per cent stake of Cubbie Station in southern
Queensland, but will sell down its interest.

But the Nationals Senator for Queensland, Barnaby Joyce, says the
Treasurer has failed to protect Australia's national interest.

AM's Lindy Kerin reports.

LINDY KERIN: In a statement released late yesterday, the Federal
Treasurer announced that a proposal by Shandong Ruyi to buy Cubbie
Station has been given the green light.

Wayne Swan says the Chinese and Japanese consortium has agreed to a
number of undertakings on employment, management and water use.

He says the company will initially own 80 per cent, but will sell down
its interest to 51 per cent within three years.

The Federal Treasurer says the decision is in the national interest and
will end a long period of uncertainty.

BARNABY JOYCE: I'm extremely disappointed. I think that the whole
proposition now that we talk about a so-called national interest in
agriculture, it's not, it's a farce.

LINDY KERIN: The National Party's Barnaby Joyce lives in the nearby town
of St George.

He's described the Government's approval as a disgrace.

BARNABY JOYCE: Well in a sentence, if the ownership of Australia's
biggest water licence, if the ownership of one of Australia's - in
commercial terms - biggest properties, if one of the biggest, or the
biggest, farms in the Murray-Darling basin, a property responsible for
in excess of 10 per cent of our nation's cotton crop, and therefore
having the capacity to even influence markets in certain areas and
certain regions, is not in our national interest, then the national
interest is a farce.

There is no national interest in agriculture. Obviously, it quite
obviously is in our national interest, and the Foreign Investment Review
Board have basically said it's alright to buy and Mr Swan has basically
let go of Australia's biggest property.

LINDY KERIN: But Cubbie Station has been under administration for years
now, and the Government hasn't been able to find an Australian buyer.
What were the other options, do you think?

BARNABY JOYCE: Well, the Government's role is not find a buyer, but the
Government could have assisted. And to believe that people are not
interested in cotton properties is absolutely absurd.

There was the capacity, if they wished, and they've shown even in the
recent weeks, there is capacity to find the money to do it, to buy
Cubbie Station as an entity, break it up into smaller farms, take some
of the water back for the environment. And as those farms are of smaller
commercial value, they would've been vastly easier to move on the market.

LINDY KERIN: The rural lobby group AgForce says the Federal Government
should take steps to ensure foreign investment doesn't compromise
agriculture in Australia.

AgForce spokesman, Dale Miller.

DALE MILLER: Well AgForce Queensland's not opposed to commercially
motivated foreign investment, so let's make that clear. But our main
concerns are that that foreign investment doesn't compromise market
competition or pricing for Australian commodity products.

So as long as that foreign investment is effectively monitored and
regulated, we do see some benefit in that capital flowing into our
enterprises.

ELIZABETH JACKSON: AgForce Queensland spokesman Dale Miller there,
ending that report from AM's Lindy Kerin.

(5) Qantas - Australia's Flying Kangaroo - is in danger of becoming roadkill

http://www.smh.com.au/opinion/politics/flying-roo-in-danger-of-becoming-roadkill-20120819-24gey.html

Sydney Morning Herald, August 20 2012

Paul Sheehan

Two weeks ago I sent an email to my contact at China Southern Airlines
as part of the daily maintenance of nurturing future column material.
Early this year I had written that Qantas long-haul international could
disappear within 10 years. I was looking towards October, when a new
frontal assault begins as China Southern launches daily flights on its
''Canton route'' to London in competition with the famed ''kangaroo
route''. I underestimated the scale of this challenge.

China Southern may be obscure to most Australians and its base city,
Guangzhou, is similarly unknown, but it is a force to be reckoned with.
The day after my email was sent I was dispatched to the Chinese
consulate for a visa, placed in a media study group and within days was
on a flight to Guangzhou. Suddenly I was attending a banquet where a
string quartet of young Chinese women in white gowns was playing Click
Go the Shears. Surreal. The week before, the Premier, Barry O'Farrell,
received similar treatment.

Call it soft power. With Chinese state-owned companies such as China
Southern, it is impossible to know where company strategy ends and
government policy begins. China Southern may be obscure in Australia now
but it is the fourth-largest airline in the world in passengers carried.
A few years ago Etihad was a very obscure name in Australia. Now people
attend AFL games at Etihad Stadium and the brand is mainstream and
respected. Ditto Emirates Airlines. Now these three carriers represent a
collective mortal threat to Qantas international.

When I told the Herald's travel editor about the vortex of soft power
and hard sell I was encountering, she said, ''No one is more aggressive
in the Australian market than China Southern. No one.'' Nor does any
airline have its latent muscle power. It is the biggest airline inside
China, by far. It will carry more than 600,000 passengers into Australia
this year. It is adding a new jet every week and will have a fleet of
500 by the year end. It will carry about 90 million passengers in 2012.
Qantas and Jetstar will carry about 36 million.

China Southern plans to be bringing a million Chinese a year to
Australia by 2020. With a leading domestic position but a modest
international operation, it must expand outwards. Three years ago, the
airline's president and chief executive, Tan Wan'geng, decided Australia
was its No. 1 market for expansion. Since then, growth has exploded,
with passenger numbers up 50 per cent, flights trebling from 14 to 42 a
week, and Australian destinations increased from two to five with the
announcement, last week, of a service to Cairns.

It was easy to see why the banquets I attended were thick with
Australian tourism and airport officials falling over themselves to
accommodate China Southern's ambitions.

Yet even these numbers do not explain the scale of the airline's
ambition. It is about to embark on constructing Airline City, a 10-year
project that will cost well over a billion dollars. The centrepiece will
be the airline's own university. Imagine the feeding frenzy of
bureaucrats, lawyers and environmentalists if a project like this were
proposed in Australia. Which is why nothing like this is envisaged in
Australia.

The head of the CSIRO, Megan Clark, just back from a visit to Beijing,
says Australia is starting to lag in research, development and patent
applications compared with East Asia. It is the mark of a nation not
using enough of its brain.

The Chinese want to use brainpower, not just horsepower. I received a
detailed briefing from Norbert Marx, the general manager of China
Southern's maintenance joint venture, GAMECO, which is training
engineers and mechanics at a rate of almost 400 a year. It will treble
its maintenance capacity in Guangzhou by 2017. It intends to be one of
the biggest aviation maintenance operations in the world, competing with
Lufthansa Technik, where Marx was a senior executive. Qantas is a
customer of GAMECO and it is impossible not to see Qantas outsourcing
more maintenance to operations such as this. China Southern's ambition
reflects Guangzhou's ambition. When the city government realised it
needed a signature building to lift the generic skyline it built Canton
Tower, the tallest tower in the world. Completed in 2010, it is twice
the height of the Sydney Tower and almost twice the height of the Eiffel
Tower. (This year it yielded its tallest title to the Tokyo Skytree.) I
did not understand Guangzhou until I saw it from this tower, then I saw
central planning on a massive scale.

As for the service on China Southern, was it up to the standard of
Qantas and its peer group? No. Even the CEO, Mr Tan, was forthcoming on
this: ''Our difficulty is service quality. There is much room for
improvement. But we want to compete with Qantas on service quality.''
Was the service on my flights poor? No. China Southern's obvious
advantage is cost. It is offering published round-trip fares to London
of $1800 economy and $5800 business class, where it has almost flatbed
seats. When the Boeing 787 comes into service to London it will lift
comfort standards.

To support growth plans Guangzhou's new Baiyun International Airport is
expanding from two runways to five. (Beijing Airport, being Beijing, has
plans for nine runways.) In contrast, at one end of the Canton route,
London Heathrow can't even build a third runway. At the other end,
Sydney Airport is responding to the growth challenge with one hand tied
behind its back, wrapped in red tape.

Correction: An incorrect reference to Sydney's lord mayor, Clover Moore,
visiting China as a guest of China Southern has been removed.

Paul Sheehan travelled to Guangzhou last week as part of a media group
hosted by China Southern Airlines.

(6) China becomes world's wealthiest state (2009)

http://english.pravda.ru/world/asia/16-07-2009/108191-china-0

16.07.2009

Source: Pravda.Ru

China's gold and currency reserves have recently hit the mark of $2
trillion. The nation can now boast of having the largest state reserves
in the world. The Chinese people save up to 75 percent of their
country's GDP in spite of the fact that China does not pay pensions and
does not have free of charge education and healthcare systems.

China's gold and currency reserves gained 17.8 percent ($177.9 billion)
during the second quarter of 2009. The nation's reserves increased by
$7.7 billion over the first quarter of the current year. Thus, the
People's Republic of China has saved $185.6 billion during the first six
months of the year, although it was $95 billion less than during the
same-year period of 2008.

China takes the first place in the world on the amounts of its currency
reserves with Japan and Russia following it. Experts say that such a
significant growth was achieved due to the predominance of export over
import. The domination of export allowed to increase the inflow of
foreign currency in the country.

Young Chinese save their cash for a rainy day, just like their parents
did 50 years ago. It is considered a universal tradition with every
Chinese family, regardless of their income.

All Chinese banks belong to the state – there is no market system there
at this point. There is no pension system in the country either, no free
healthcare and no free education at all. The people of China pay for
everything themselves. That is why the level of savings in China made up
45 percent of the GDP in the beginning of the 2000s and reached the
record amount of 75 percent in 2009. It is hard to imagine that the
Chinese save 75 percent and spend only 25 percent. Specialists say that
such a system can not be found anywhere else in the world. It is worthy
of note that the Chinese savings are not included in $2 trillion of gold
and currency reserves.

Experts continue saying that China will soon replace the United States
as the world leader on the economic arena. The talks about China's
possible leadership emerged soon after the beginning of the economic
crisis. However, no one expected that changes would come so quickly.

It is worthy of note that it is China's Petrochina that tops Ernst &
Young's list of world's largest companies. The USA's Exxon Mobil was
ranked first on the list only six months ago.

Daria Yurischeva Bigness.ru

(7) China ups lobbying game, but faces key tests in U.S., Canada

(Reuters) - Back in the day, before the U.S. Congress tore apart China's
proposed multi-billion dollar deals with Western companies one after the
other, Beijing's lobbying left little to the imagination.

By Paul Eckert and Rachelle Younglai and David Ljunggren

WASHINGTON/OTTAWA |

Reuters, Wed Aug 22, 2012 6:43pm EDT

http://www.reuters.com/article/2012/08/22/us-china-northamerica-lobbying-idUSBRE87L15N20120822

China's Washington embassy blasted out form letters to every U.S.
lawmaker when it was upset with Congress, warning of grave damage to
Sino-American relations, congressional aides recall.

One aide to a senator, who was being courted by arch rival Taiwan, was
told by visiting Chinese officials “that all trade between your state
and China will come to a screeching halt!”

The confrontational tactics rarely worked – in one pivotal decision,
Congress in 2005 essentially killed Chinese state oil company CNOOC’s
$18.5 billion bid for U.S. firm Unocal – and now China has largely
abandoned them.

Instead of issuing tirades, the Chinese hire top-notch lobbying firms
whose ranks are filled with well-connected former U.S. and Canadian
officials; buy TV advertisements to buff their image; and seek
acquisitions less likely to stir nationalistic fervor.

Whether this new strategy fares any better could be known soon. CNOOC is
trying to buy Nexen Inc., a Canadian oil company with assets in the U.S.
Gulf, in a deal valued at $15.1 billion. China’s Wanxiang Group is
poised to take over A123 Systems Inc, a struggling U.S. battery maker
that received hundreds of millions of dollars in grants from the Obama
administration. And Huawei, a Chinese company founded by a former
People’s Liberation Army soldier, along with Chinese telecom company ZTE
Corp, are coping with a congressional security investigation.

CNOOC PREPS AHEAD OF BID

China may be the world’s second largest economy, a veto-wielding
permanent member of the U.N. Security Council and the fastest growing
export market for a United States eager to revive its economy through
trade. But the country of 1.3 billion labors under a poor image in
Washington.

Chinese firms – even those like Wanxiang that are not directly beholden
to the ruling Communist Party – face intense scrutiny from lawmakers who
see them as tools of China’s geopolitical strategy or part of a system
that grossly favors their own firms with allegedly illegal subsidies and
what critics see as an artificially low currency.

CNOOC’s second major bid for a North American company, Calgary-based
Nexen, came after the Chinese firm laid the groundwork in Canada and
after Beijing made an effort to understand how the U.S. Congress
operates. Nexen, Canada’s 10th largest energy firm, has 10 percent of
its assets in the U.S. Gulf.

“They know there is no point in just arriving and doing a brief tour of
the country and thinking that approach will produce results. Those days
are over,” said a source familiar with the Chinese lobbying effort in
Canada, who spoke on condition of anonymity.

When CNOOC came looking for introductions in Canada, it chose Hill and
Knowlton Canada and its president, Michael Coates, a longtime
Conservative who worked for a government minister before becoming a
lobbyist in 1983.

Coates, who was leader of Conservative Prime Minister Stephen Harper’s
election debate preparation team for three federal elections,
accompanied CNOOC Vice President Fang Zhi during talks with top Canadian
bureaucrats in which Fang stressed Canada was an attractive place to
invest. He did not mention any particular targets.

Along with doing their homework and talking to the right people in
financial markets, Chinese firms had a greater intuitive grasp of what
was possible in Canada, a second source familiar with China’s lobbying said.

“They went after Nexen because they knew everybody knew Nexen was a
mess. If Nexen had been a crown jewel …” this source said, making clear
a bid for a more important firm would have been rejected.

The companies still need approval from Canadian authorities.

Hill and Knowlton Canada declined to comment.

In Washington, CNOOC also hired Hill and Knowlton. Its lobbyists include
a former Democratic congressional aide, Robert Ludke, who worked with
the Chinese company during its failed bid for Unocal.

And CNOOC is voluntarily submitting its deal for a U.S. government
security review.

“In contrast to 2005, we’re finding people are much more willing to
consider the benefits of the deal from a U.S. perspective,” CNOOC
spokesman Peter Hunt said.

TRANSLATING CONGRESS INTO CHINESE

The turning point for Chinese lobbying efforts in North America was the
tumultuous CNOOC attempt to buy Unocal, whose blue-and-orange gas
station signs were something of an icon to many, including some U.S.
lawmakers.

In the summer of 2005, Congress voted overwhelmingly against the bid. It
was a protest vote, but CNOOC understood that it meant the deal was
going to be rejected by the U.S. government and it jettisoned the plan.

China’s U.S. ambassador knew something had to change.

Just over a week after the vote, the Chinese Embassy retained top
lobbying firm Patton Boggs. The monthly retainer, which was initially
$22,000, has since climbed to $35,000, according to the latest forms
disclosed under the Foreign Agents Registration Act.

A handful of lawmakers, who were shocked at the visceral reaction to the
Unocal deal, formed a group to help China understand Congress and vice
versa. The Chinese Embassy started inviting members of Congress to meet
their policymakers and its ambassador – then the suave and good-humored
Zhou Wenzhong – paid visits to Capitol Hill where he would take verbal
beatings over volatile issues such as China’s support for Sudan.

“As long as the door was closed and the media wasn’t there, (lawmakers)
and the Chinese discussed third rail issues,” said one congressional
aide. “This allowed Americans to blow off a lot of steam.”

Representatives, who rarely got the chance to talk to U.S. Cabinet
members, much less Chinese policymakers, were now able to confer with
Beijing’s top ministers and make productive trips to China. The
bipartisan Congressional U.S.-China Working Group “helped translate the
Congress into Chinese,” said the aide.

Gone were the old ham-handed approaches – like the 20-page blast fax on
Taiwan and Tibet that once went to scores of U.S. lawmakers, according
to congressional aides and trade experts.

China’s sheer economic size and importance as a market increasingly
speak more effectively than its diplomats or hired hands from K Street.

While Chinese imports to the U.S. remain very high, 420 of the 435
congressional districts saw higher growth in exports to China than they
did to other overseas markets in 2011, according to trade data compiled
by the U.S.-China Business Council. Even districts of strident critics
of Beijing or authors of protectionist legislation aimed at China
enjoyed rapid growth in exports to the Chinese market.

And the tide of Chinese investment has just begun, with China and its
companies sitting on hundreds of billions of dollars in cash.

NO ONE WANTS TO BE HUAWEI

CNOOC and Wanxiang are doing whatever it takes to avoid a repeat of what
happened to Huawei, the world’s second largest telecom equipment maker,
which has had deal after deal fall apart in the United States.

In 2008, Huawei and private equity firm Bain Capital were forced to give
up their bid for 3Com Corp after a U.S. panel rejected the deal because
of national security concerns. Some lawmakers fear that Huawei gear
could allow the Chinese to tap into the U.S. telecommunications network
or even provide a way for it to sabotage systems.

Then in 2011, the company was forced to relinquish plans to buy some
assets from U.S. server technology firm 3Leaf after the Committee on
Foreign Investment in the United States mandated that Huawei divest
certain parts of the deal.

It was a shock – especially given the deal, which had already been
consummated – was worth just $2 million. Huawei had not even filed with
the U.S. government for security approvals.

In contrast, when Wanxiang announced in August it would rescue A123
Systems, the companies quickly said they would ask the U.S. government
to review the deal for potential national security concerns.

The Chinese auto parts maker – which plans to provide up to $465 million
to A123 – has retained a law firm for the security review, but has not
hired lobbyists to make the case for the takeover.

“We’re confident the process will be transparent and will be fair. I
think we’re trying to help the company and save the jobs,” said Pin Ni,
president of Wanxiang America Corp.

With lawmakers probing Huawei for any potential threats to U.S.
telecommunications, the company has boosted its lobbying efforts. It
plucked Donald Purdy, a member of a White House staff team that drafted
a U.S. national strategy to secure cyberspace in 2003, to serve as chief
security officer for its U.S. operations.

“Politics are politics. The realities of this industry are that, whether
you are talking infrastructure or devices, it is a transnational
industry. It is utterly borderless,” said William Plummer, U.S.
spokesman for Huawei.

The company now has seven firms registered to lobby U.S. lawmakers,
including APCO, Doyce Boesch and Fleishman-Hillard, according to forms
filed under the lobbying disclosure act. That is up from four firms in
2011, two in 2010 and one in 2009.

Top lobbyists for Huawei include William Black, a former chief of staff
to Steny Hoyer, then Democratic leader in the House of Representatives.

Huawei has also started appealing to mainstream audiences. During this
year’s Summer Olympics, it aired commercials on NBC. The company
sponsored a high profile food fair in Chicago and is set to sponsor
similar events across the country.

In Canada, Huawei has made strenuous efforts to show a long-term
interest in the country since winning a contract in 2008 to build
networks for domestic operators Telus and Bell Canada.

It opened a Canadian head office in Ontario and has received a grant
from the province to create jobs and invest C$67 million in research and
development. Huawei has since hired an executive from Canadian tech
company Nortel Networks to be its senior vice president and has
partnered up with Telus to establish a center in their names at a
leading Canadian university.

LOBBYING NOT THAT EFFECTIVE

But hiring a former government official doesn’t always work.

Take China’s ZTE Corp, the world’s fifth largest telecom gear maker. It
hired Jon Christensen, a relatively unknown former Republican
congressman from Nebraska.

The FBI has since opened a criminal investigation of ZTE’s sale of U.S.
computer equipment to Iran in breach of U.S. sanctions, and Christensen
resigned as ZTE’s lobbyist after the probe became public.

And many lawmakers have yet to be persuaded by China.

“The fact that they have formalized their lobbying efforts means that
they’re getting bolder and bolder in the actions that they have, and I
think that should concern individuals in the United States,” said
Republican lawmaker Randy Forbes, a key critic of the Unocal deal.

One veteran advocate for Taiwan independence – Beijing considers the
island a wayward province – says China’s heavy-handedness often
backfires, to his group’s advantage.

“A lot of people say they’re gaining prowess, they’re being more
prominent and they’re learning … but I have never seen it,” said Coen
Blaauw of the Formosan Association for Public Affairs.

But Blaauw says China’s deep pockets and big market talk.

Referring to the top Republican and Democrat in the House of
Representatives, he said: “My worry is the big corporations who can call
up John Boehner and Nancy Pelosi and tell them ‘If you do this, (the
companies will) lose billions and billions of dollars.’”

(Additional reporting by Roberta Rampton, Jim Wolf, Ayesha Rascoe and
Lauren French. Editing by Warren Strobel and Martin Howell)

(8) Hillary visits Pacific Islands Forum to counter to China's growing
influence in South Pacific


http://usa.chinadaily.com.cn/world/2012-08/29/content_15714086.htm

Clinton visit raises concerns

Updated: 2012-08-29 01:32

By Cheng Guangjin (China Daily)

US secretary of state to attend Pacific forum

US Secretary of State Hillary Clinton's expected visit this week to the
Cook Islands in the South Pacific has raised geo-political concerns over
competition among major powers in the region.

Clinton's presence as the most senior US official to attend the Pacific
Islands Forum indicates the United States plans to re-engage with the
South Pacific, analysts said.

"Attending the forum is part of the US pivot to the Asia-Pacific
region," said Da Wei, an expert on US studies at the China Institutes of
Contemporary International Relations.

It's also a show of US "soft power" and the Obama administration's
increased attention to multilateral organizations, Da said.

Clinton will also pay a two-day visit to China on Sept 4 and 5, during
which the two sides will exchange views on Sino-US relations and other
issues of common concerns, the Foreign Ministry said on Tuesday.

The two countries' engagement on the Diaoyu Islands, South China Sea and
Clinton's recent visits to Asia, Africa and the South Pacific — which
have been viewed as encircling China — will likely be high on the
agenda, analysts said.

The US State Department is yet to formally confirm Clinton's visit to
the Cook Islands, but local media described her visit as the biggest
since Queen Elizabeth II came to the country in 1974.

The challenges of climate change and protecting one of the world's last
pristine ocean environments are set to dominate the agenda of the
Pacific Islands Forum, but on the sidelines of the summit officials are
abuzz about Clinton's visit, according to AFP.

The 16-nation forum is largely made up of small island states, along
with resource-rich Papua New Guinea and regional powers Australia and
New Zealand.

Fiji's suspension from the forum and whether to allow the former member
back into the group are expected to be discussed. Fiji was suspended in
2009 after the 2006 military coup, according to Xinhua.

Media reports quoted diplomatic sources as saying that the United States
expects the forum to readmit Fiji, and has urged Australia and New
Zealand to end their isolation of the country, suggesting they are
giving too much room for Chinese moves in the region, according to Xinhua.

Da said the China factor in US re-engagement in the South Pacific should
not be played up.

"Although China has increased interactions with countries in this region
in recent years, it is still not a major player in the South Pacific,"
Da said.

Da said it's normal for the US to feel challenged as China rises as a
"newcomer" in the South Pacific, an area that has historically had close
ties with Washington.

China has sent participants to the forum since 1990, and State Councilor
Dai Bingguo is said to attend this year's forum, according to media reports.

Competition is unavoidable as China's influence grows in places where
the US once played a dominant role, Da said.

"But such competition should not be overstated. It's not necessary to
have a zero-sum game," Da said.

China's presence in the South Pacific is now "a fact of life", said
Australian Foreign Minister Bob Carr.

"My message really is that Australia and New Zealand have got to live
with the fact that China will want to deliver aid in this part of the
world (and) there is nothing we can do to stop it," Carr told the
Australian Financial Review.

The US has its own Pacific territories in Guam, the Northern Marianas
and Hawaii, but in recent years — with the exception of American Samoa —
it has paid scant attention to the South Pacific.

Michael Powles, a senior fellow at the Centre for Strategic Studies in
Wellington and a former New Zealand diplomat, said the presence of
Washington's top diplomat at the summit would send a pointed message to
Beijing that the US intends to re-engage in the region.

"The US has suddenly started doing a lot more in the Pacific after quite
a long time of doing the absolute minimal amount, whereas over the last
few years China has been pretty active," he told AFP.

Contact the writer at chengguangjin@chinadaily.com.cn

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