MAY 2006 CHINA NEWS

China's Army bans snoring

SHANGHAI, China (AP) -- No drug users, no tattoos, no heavy snorers.

China's military is tightening its standards for recruiting potential officers as it adjusts to changing social trends, ordering drug and psychological tests, among other new requirements, the official Xinhua News Agency reported Monday, citing a military health official.

The People's Liberation Army headquarters released the new recruitment rules Sunday, it said.

Recruits with fashionable tattoos will be barred from military schools, although traditional tattoos of ethnic minorities will be allowed if they are not too obvious when the recruit is wearing summer shorts, Li Chunming, the army health official, was cited as saying.

"Tattoos will tarnish the military's image, even the scars of removed tattoos," Li said.

Heavy snorers will also be banned, he said. The report did not say how the army would test for that problem.

The report cited an unnamed official as saying that the army began requiring urine tests for drugs because of a surge in the number of young Chinese drug users.

The psychological assessment will involve a written test followed by an interview for those who perform well enough, the report cited Miao Danmin, a professor with the Psychology Research Institute of the Fourth PLA Medical College, as saying.

"The army has specific requirements for its officials with regard to personality and mental health. The test will help teenagers make the right decision," Miao said.

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Ikea opens Chinese flagship store, biggest outside Sweden

Swedish furniture group Ikea, which is looking to grow in China, will open a flagship outlet in Beijing, its biggest store outside of Sweden, the company said.

"We have closed our old store in Beijing and we are opening a new one," Ikea spokeswoman Charlotte Lindgren told AFP.

The new store will be 43,000 square meters (462,848 square feet), second only in size to the Stockholm showroom, which covers 55,000 square meters (592,015 square feet).

The Swedish multinational has opened four stores in China since 1998, including two in Shanghai, she said.

"We have great ambitions in China where we want to open new stores," she said, adding however that no others were under construction for the time being.

Almost 20 percent of Ikea's furnishings sold worldwide are "made in China".

"Our prices in China have been reduced since we opened our first store," Lindgren said.

Ikea has 231 stores in more than 30 countries.

On April 24, the company is to open its first store in Japan, in Tokyo, and it is scheduled to open another in Yokohama in September.

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GM sees 20% growth in China this Year

BOAO, China (Reuters) - General Motors Corp. is likely to boost its share of the Chinese market further in 2006 with sales growth of at least 20 percent, a senior executive said recently.

Kevin Wale, GM's managing director for China, said that the company, which is planning to launch two to three new models a year, is likely to enjoy sales growth higher than the projected 2006 market average of 15 percent to 20 percent.

Sales in China jumped 35 percent last year, catapulting it above Volkswagen AG as the top foreign auto seller.

China is a bright spot for the world's largest auto maker, which has turned in six straight quarters of losses, stemming largely from its troubled North American operations.

"Conservatively, we're looking at 20 percent as solid growth for the year," Wale said on the sidelines of the Boao Forum, an annual gathering of business and political leaders on Hainan island off China's south coast.

GM's market share, defined as sales of passenger cars and commercial vehicles, including small vans and trucks, rose to 11.2 percent at the end of 2005 from 9.4 percent a year earlier.

Helped by the launch of two new car models, market share jumped further in the first quarter to between 13 percent and 13.5 percent, Wale said.

But he said GM was unlikely to sustain a share of more than 13 percent for 2006 as a whole, even though the company plans to launch one or two more entirely new models later this year, as well as several upgrades of existing vehicles.

Apart from aiming to launch two to three new models in China every year, Wale said another objective is to expand the firm's network of about 1,000 dealerships around China.

Wale said GM, which manufactures cars in five cities in China, now had the capacity to ramp up production without building any more new plants.

"We will continue investing in China over the next few years as our volume grows, but it would be in existing facilities primarily," he said.

Asked whether plans by GM's Chinese partner, SAIC Motor Corp., to roll out cars it has developed itself would have any impact on their joint venture, Wale said: "Not at all. We have a very strong relationship with SAIC.

"We don't regard it as a threat. The market potential in China is enormous."

Having churned out Buicks and Santanas at ventures with GM and VW for years, SAIC set up a $460 million unit in February to make self-developed cars later this year based on MG Rover technology acquired from the failed British car maker.


Chinese carmaker going global

SHANGHAI (Reuters) - Top Chinese car maker SAIC Motor Corp. said it would spend another $1.25 billion to fuel its ambition of selling its own brand of cars globally, putting to use technology gleaned from its foreign partners and Britain's collapsed MG Rover.

Having churned out Buicks and Santanas at ventures with General Motors Corp. and Volkswagen AG for years, SAIC set up a $460 million unit in February to make self-developed cars later this year based on MG Rover technology acquired from the failed car maker.

SAIC joins fellow Chinese car makers Geely Automobile Holdings Ltd. and Chery Automotive Co. as they aim to follow other Asian car makers such as Toyota Motor Corp. and Hyundai Motor Co. onto the global scene.

With the new investment of 10 billion yuan, SAIC's subsidiary would add five production lines to build 30 new models by 2010, more than doubling output capacity to 300,000 units, said Wang Xiaoqiu, general manager of the unit, SAIC Motor Manufacturing.

"Our target is to sell over 200,000 own-brand cars by 2010, with 45,000 of that shipped to overseas markets, including Europe," he said.

SAIC has targeted vehicle sales, including trucks and buses, of 2 million units by 2010, of which 600,000 would be developed on its own.

SAIC last year lost out to Nanjing Automobile in the bidding process for MG Rover, but owns the intellectual property rights to build the Rover 25 small car and Rover 75 saloon under an earlier deal.

The company is currently in talks to buy the rights to use the two models' names from German car maker BMW.

Global auto makers have rushed into China in the past few years, setting up factories at breakneck speed to grab a piece of the ballooning car market.

Analysts have warned that some foreign brands would be squeezed out eventually, given the Chinese government's stated ambition of nurturing a national car industry through the biggest brands, including SAIC, FAW and Dongfeng Motor.

To make sure homegrown brands would acquire the necessary technology, Beijing requires foreign auto makers wanting to set up shop in China to partner with a local car maker, with a 50 percent ceiling for ownership of any joint venture.

China's strategy of leveraging well-known Western brands to take products abroad is not new.

A swathe of Chinese firms from PC giant Lenovo Group Ltd. to home electronics firm TCL Corp. have trod the same path, to the dismay of globally established rivals.

With decades of experience gained through world-class players GM and VW, analysts said SAIC has a better chance at success than Geely and Chery, although they still faced hurdles selling abroad, most notably concern over quality and price.

"There is certainly a chance for SAIC to succeed with its own brand, but it needs to get the price right," said Matthew Kong, an auto analyst with Fitch Ratings.

"They've got to give me a good reason to pick a new SAIC model rather than the more familiar Accord or Camry," he added, referring to Honda Motor Co. and Toyota's best-selling cars.

An SAIC executive said the car maker would offer a broad range of own-brand passenger cars priced from 65,000 yuan to 300,000 yuan ($8,115 to $37,460).

The first model due out soon would be a mid- to high-end sedan based on the Rover 75 platform, he said, declining to disclose the price.

Meanwhile, rival Nanjing Auto, which beat SAIC in the bid to take over MG Rover, plans to roll out its first locally made MG75 sedans in the first half of 2007 using acquired technology, state media said last month.

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