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Microsoft Word - Sept-Oct Newsletter FINAL

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  • 1. N E W S L E T T E R September / October 2006 Story of the Month Chinese Companies Protect Their Own IPRs Early this year, Chinese flash-memory product maker Netac filed a lawsuit in the Eastern District of Texas against its American competitor PNY Technologies for infringements on its patent, a move aimed at leveling the playing field in its overseas development. The Shenzhen-based company claimed PNY Technologies violated its U.S.-registered patent on an electronic flash-memory external storage method and device. It also requested the court suspend sales of PNY's flash-memory storage devices. "We want to get a fair competition in the United States, while Netac is expanding its presence in the overseas market," said Deng Guoshun, president of Netac. The lawsuit is one of the rare cases of a Chinese company suing a U.S. firm for infringements of intellectual property rights (IPRs) in the United States, in Wuxi of East China's Jiangsu Province, in October while many Chinese companies receive complaints from 2004, but the court has yet to rule on the case. foreign companies on similar accusations. "It is an encouraging sign that Chinese companies become Netac had also filed a legal action in patent infringement mature in using IPRs to protect their interests, as more against the domestic company Beijing Huaqi and more Chinese companies have developed their own Information Digital Technology Co Ltd in 2002 and won innovations and the country is trying to become an the case in the first trial in 2004. innovative nation," said Hu Zuochao, vice-president of Patent Protection Association of China. "We have spent a huge amount of money and energy on research and development, so we hope other makers PNY is a computer-related peripheral maker based in will honor our IPRs," said Deng. Deng also said that Parsippany, New Jersey, which was one of the top three about 10 companies have already licensed the flash-memory product makers in the United States. technology from Netac, including the South Korean The flash-memory product market is estimated at US$2 giant Samsung Electronics. billion. Netac hired Morgan Lewis & Bockius LLP, one (Source: China Daily) of the top 10 U.S. law firms and said it was also looking into possible actions against other players in the market. NAROS Update The patent application received protests from 19 other international makers because it covered very wide areas NAROS Hosts Shenzhen BPO Event in New and might stop any other companies from entering the York market, and was finally approved by the U.S. authorities. After that, Netac began to contact makers of those On Wednesday, November 1, 2006, the City of Shenzhen, devices in the United States, including PNY and SanDisk. and the North American Representative Office of In addition, it sued a factory of the Japanese giant Sony Shenzhen, P.R. China (NAROS) hosted a major seminar
  • 2. and luncheon in New York City entitled "Shenzhen: and high technology is replacing traditional China's New Bangalore, Opportunities and Incentives in manufacturing as the pillar of Shenzhen's economy. Business Process Outsourcing (BPO)." Speakers included Liao Junwen, Senior Advisor to the Shenzhen Municipal Government, Wang Xuewei, With well over 170 guests in attendance, the seminar Director-General of the Shenzhen Bureau of Trade and featured presentations by high-level Shenzhen Industry, Chen Xiaoling, Consul General of the Chinese government officials as well as global leaders in the field Consulate in Toronto, and Xing Yabin, President and of service outsourcing. The goal was to draw attention CEO of ZTE Canada. to the trend of an emerging China, particularly Shenzhen, in the field of outsourcing and offshoring, as both a compliment and an alternative to other more firmly established locations such as India and the Philippines. This event coincided with the inauguration of the China-U.S. Chamber of Commerce (CUCC), which featured many high-level Chinese diplomats stationed in New York, as well as a speech from Congressman Gary Ackerman (D-5th District, NY). A signing ceremony was also held to finalize a strategic alliance between the City of Shenzhen, and the China-U.S. Chamber of Commerce. US/China Business News IBM Moves Its Global Procurement Headquarters to Shenzhen IBM, the world’s biggest computer services firm announced the relocation of its global procurement headquarters from New York to Shenzhen. The decision to move the firm to Shenzhen came after the company’s Asia-Pacific office completed its move to Shanghai from Tokyo this year. This marks the first time the headquarters of an IBM corporate-wide organization has been located outside the United States, NAROS Hosts Shenzhen Promotion Event in the company said in a statement. Toronto, Canada IBM has been sourcing in Asia for more than 50 years. On Friday, November 3, 2006, the Shenzhen Bureau of The demand for software and services across Asia and Trade and Industry (BTI), and the North American worldwide is growing. Asia is home to more than Representative Office of Shenzhen, P.R. China (NAROS) 1,850 IBM procurement and logistics professionals, hosted a luncheon in Toronto entitled "Shenzhen: many of whom work at the China Procurement Center Updates and Opportunities in China's City of in Shenzhen which has been operating for more than a Innovation." decade. China is increasingly a key market for many tech companies. In 2004, the country overtook the With approximately 130 guests in attendance, the event United States as the world’s largest exporter of high-tech served to highlight Shenzhen as a city of innovation, goods such as laptop computers, mobile phones and where value-added industries are currently growing, digital cameras.
  • 3. Sony, Sanyo, Samsung, Wal-mart, Carrefour, B&Q, and spa. The hotel’s IKEA and many other conglomerates have set up global rooms and suites are or regional procurement offices in the city of Shenzhen. equipped with broadband The IBM move highlighted Shenzhen’s attraction as a internet access, state-of sourcing center for multinational companies. -the-art communications and entertainment Starbucks Plans to Open 100 Stores in China facilities. The hotel also Every Year has 30 function rooms, including one auditorium Starbucks plans to open at least 100 stores a year in that can accommodate up China, aiming to build on early successes in the market. to 3000 people and The coffee chain expects to eventually rival its domestic provide an ideal U.S. market in scale. The company has opened about Shenzhen venue for 200 stores in China since 1999 and plans to accelerate its meetings, seminars and investment in big cities such as Beijing, Shanghai and social events. (Photo: Marco Polo Hotel Shenzhen) Guangzhou and in China’s fast developing hinterland. Starbucks is also tightening control over its China franchise. It said it had bought out the controlling Church’s Chicken Seeking to Franchise in shareholders in the company that operates 62 outlets in China Beijing and Tianjin. On of the biggest fast food chains in America, is now ICBC Completes World’s Largest IPO preparing to enter the Chinese market by franchising stores. The executives of Church’s Chicken believe that entering China will be an important strategy for the Industrial & Commercial Bank of China (ICBC) has development of the company. completed the over-allotment option for its domestic IPO; bringing total proceeds of its stock offer in Church’s Chicken was founded in 1952. It now has Shanghai and Hong Kong to US$21.9 billion-the world’s more than 1600 stores all over the world. Church’s largest share sale. ICBC sold an additional 1.95 billion Chicken has signed the agreement with China Chain A-shares in the over-allotment at the initial public offer Store & Franchise Association to participate in the price of 3.12 yuan, bringing the size of the Shanghai offer forthcoming session for overseas franchisors to meet to 46.644 billion yuan (US$5.9 billion), the bank said. It China local master franchisees. was the first Chinese company to use an over-allotment option in a domestic IPO. China began permitting such options to meet excess demand for shares in September, Doing Business in China although the practice has long been common in Hong Kong and other mature markets. China Takes Control of Its Real Estate Market ICBC, China’s biggest bank, completed a Hong Kong Six Chinese ministry offices jointly released a new over-allotment option in early November, bringing the measure to regulate foreign investment in Chinese real Hong Kong Portion of its IPO to HK$125 billion. The estate, the Measure. The Measure provides specific IPO, accounting for 16.7% of the banks expanded capital, rules governing: surpassed Japan’s NTT Mobile Communications, which • The eligible forms that can be used by foreign raised US$18.4 billion in 1998, as the global record. investors for holding Chinese real property • The extent to which leverage financing can be Marco Polo Hotel Opens in Shenzhen used for acquiring Chinese real estate • The approval procedures required for investing The Marco Polo Hotel Shenzhen has opened for business. in real property The five-star full service business hotel is located in the The Measure may have the greatest impact on foreign heart of the new Futian Central Business District of the real estate developers in their ability to borrow funds to city. It is close to the Civic Center and the new finance their China real estate development projects. Shenzhen Convention and Exhibition Center. The hotel On the hand, the Measure may have the least impact on has 6 restaurants, swimming pool, gymnasium, sauna real estate management companies that focus on
  • 4. providing management services as the Measure focuses manufacturing, and the energy conservation and primarily on the acquisition of property, not its environmentally conscious sectors. Investment that management. In the short term, real estate equity aids to improve and further develop China’s agriculture, investors may find opportunities to acquire China. service industry and traditional manufacture will be (Source: PWC China Outlook) encouraged as well. China’s growing interest in high-tech industries like electronics, biology, China Adopts Tax Incentives for Central petrochemical and medicines signifies that China is Regions refocusing its foreign investment. A senior official with the State Administration of Taxation (SAT) stated that foreign investors in China’s Shenzhen Facts central regions can enjoy beneficial tax policies set out in Shenzhen People – Legless Shenzhen tax laws and regulations. SAT deputy director Wang Li calligrapher, Huang Jianming, ascended the told the First Central China Investment and Trade Expo Great Wall. Huang climbed altogether 1,055 in the capital of Hunan Province that if foreign investors steps, covering 3.7km from 8:15 to 11:03a.m. begin to reinvest the profits generated from their Shenzhen Art – Art critic and curator, Huang businesses in China in other enterprises in the country or Zhuan, will host an exhibition at the OCT increment their registered assets for at least five years, Contemporary Art Terminal. The goal is to the government would give a 40 percent rebate on the enable more people to review modern Chinese tax paid for the reinvested capital. Wang also added, art with a critical eye. “If the newly-built businesses are export or high-tech Shenzhen Nightlife – BJ’zz.com is the newly companies, the tax paid for the reinvested capital will be opened Jazz Bar in the 3rd Floor of the totally rebated.” Landmark Hotel, Luohu. The management promises to engage major jazz acts to Central China comprises the provinces of Shanxi, Anhui, perform in the near future. Henan, Jiangxi, Hunan and Hubei. It is the country’s major farm production base as well as a principal base for energy, raw materials and manufacturing. Opening the country to the world and achieving sustainable economic growth is essential to the development of central China’s economy. The valued-added tax (VAT) reform, Wang said, is to extend to some old industrial base cities that need to modernize outdated industrial projects. The VAT reform has already been launched in North American Representative Office the north east region to provinces of Lianoning, Jilin and Of Shenzhen, P. R. China Heilongjiang. 中国深圳市驻北美经贸代表处 China Looking for Advanced Tech Investors 350 S. Figueroa Street, Suite 288 Los Angeles, CA 90071 As China continues to receive foreign investment, it will Tel: (213) 628-9888 be looking to welcome investors that have advanced Fax: (213) 628-8383 Email: info@shenzhenoffice.org technology to offer. Website: www.shenzhenoffice.org China’s Industry Guide for Foreign Investors will undergo its third revision since 1997. China hopes to If you have any questions or would like to concentrate more investment into research and subscribe/unsubscribe to the newsletter, please contact development centers, high-tech industries, advanced Silver Tien at silvertien@shenzhenoffice.org. This newsletter is provided by the North American Representative Office of Shenzhen, P. R. China (NAROS) for general guidance and information only, and does not constitute the provision of legal advice, investment advice, or professional consulting of any kind. The information is provided ‘as is’, with no assurance or guarantee of completeness, accuracy, or timeliness of the information, without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.