The Weekly News Update is a weekly roundup of business news from around the Asia-Pacific region, covering Fusion Consulting's core industry practices: chemicals, consumer & retail, financial services, industrial & logistics, information & communication technology, life science and media & leisure. If you have colleagues or friends who may be interested in subscribing, please forward this email to them and copy knowledge@fusionc.com.    China's water and wastewater treatment sector   Huge demand exists in China for clean water with ample opportunities for  investors, water companies or water technology suppliers in the municipal and  industrial water supply and wastewater treatment market. Market-oriented  regulatory changes have lowered pricing risk, and opened up the sector.    Find out what the needs, solutions and opportunities are. In the news this week l 7-Mar-08 Asian players withdraw from fiercely competitive Chinese handset market

Worldwide sales of mobile phones to end users surpassed 1.15 billion units in 2007, up 16% from 2006. Sales growth are expected to slow to 10% in 2008 as mature markets (e.g. Japan) become more saturated. Global phone makers are now turning to emerging markets, especially China and India, which are expected to provide much of the growth. This could spell trouble for some Asian mobile handset makers as their market share and visibility is low compared to major players such as Nokia, Motorola, and Samsung Electronics, which had global market share of 37.8%, 14.3%, and 13.4% respectively, in 2007. China is the global hub for mobile phone manufacturing, accounting for half of all units shipped worldwide. Chinese telecoms equipment maker ZTE joined the ranks of the world's 10 largest mobile phone makers in 2007. Taiwan's HTC plans to invest US$15.5 million in a factory in China to cater to a market where mobile phone sales soared 23% to 200 million units in 2007. But in a competitive market dominated by global suppliers who enjoy economies of scale, Asian mobile phone players (e.g. China's Ningbo Bird and Japan's Kyocera) have little choice but to withdraw from the Chinese handset market.

Chemical Asia - BASF mulls more manufacturing, R&D investments Source: Business Times Singapore, 4 March 2008 German chemicals firm BASF is exploring further manufacturing as well as research and development (R&D) investment possibilities in Singapore as part of its Asian expansion plans. BASF's upcoming expansions in Asia are aimed at countering the impact of an economic slowdown in the United States and Eurozone on the group. The group recently opened its second global R&D centre in Singapore - for organic electronics, after its first nanotechnology surfaces laboratory. In manufacturing, it will spend EUR900 million (US$1.4 billion) more this year to expand its Nanjing petrochemical cracker. It is also planning a new world-scale MDI chemicals plant in Chongqing, as well as others in Asean, India and Japan. India - Excise pain for petrochemical companies Source: Economic Times, 1 March 2008 Budget 2008 has made it more difficult for export-oriented units (EOUs) to sell in the Indian market. EOUs, generally eligible to sell up to 50% of their annual sales domestically, will now have to pay customs duty at 50% of applicable rates for such sales, compared to 25% till now. Indian chemical companies, Reliance Industries, South Asian Petrochemicals and IG Petrochemicals, will witness an erosion in their competitive advantage when selling in India. Also, costs are likely to go up for polymer manufacturers as the finance minister has re-imposed 5% import duty on naphtha, from nil in 2007. This will adversely impact companies like Reliance Industries and Haldia Petrochemicals, which use naphtha for polymer production. Japan - Mitsubishi Chem, Teijin plan carbon fibre auto parts Source: Reuters, 29 February 2008 Japanese synthetic fiber maker Teijin Ltd. and chemical producer Mitsubishi Chemical Corporation each plan to begin mass production of carbon fiber automotive parts by 2010. The move is in response to growing demand from carmakers for light but strong parts to boost fuel efficiency as consumers grapple with soaring oil prices and have become more conscious of global warming when making a purchase. Teijin said that the carbon fibre market is expected to produce 44,000 tonnes in 2010, double the output of 2005. Major Japanese firms produce about 70% of the world's carbon fibre. Teijin, which controls 20% of the global carbon fiber market, is ranked second in this field, after Toray Industries Inc, which has a market share of some 30%. View an example of our experience in this industry.

Consumer & retail India - Reliance Retail in joint venture for optical business Source: The Economic Times, 4 March 2008 Reliance Retail and Pearle Europe have formed a joint venture to launch a chain of optical stores in India, eyeing a business that is controlled by the unorganised sector. The chain will comprise of independent stores, and stores within Reliance Retail formats such as Hypermart, Super and Wellness stores. Reliance Industries is one of several companies looking to establish a nationwide chain of organised or modern retail stores across India. Reliance's grocery stores have become the most visible sign of the spread of organised retail. Reliance is also making a big push in non-grocery speciality stores, including apparel, footwear and jewellery. More tie-ups with overseas retailers are expected to take shape in the coming months. India - Dabur, HUL to stir up milk beverage market Source: Business Standard, 3 March 2008 Dabur, which launched its milk beverage mix brand Chyawan Junior four months ago, is planning a national-level rollout for it by September 2008. Chyawan Junior is currently test-marketed in Maharashtra and West Bengal. Another company to foray into this market is Hindustan Unilever with its Kissan Amaze brainfood range, which is a milk beverage mix product, biscuits and snacks. The company is test-marketing its product in Tamil Nadu and Karnataka. The Rs15 billion (US$372 million) milk beverage mix market is dominated by GlaxoSmith Consumer's Horlicks and Boost, Cadbury's Bournvita and Heinz's Complan. The two new entrants - HUL and Dabur - however, have unique propositions. They will differentiate themselves through new formulations such as the promise of boosting children's intelligence. Indonesia - Friesland investment targets Asian functional drive Source: AP-Foodtechnology, 27 February 2008 Dairy and ingredients firm Friesland Foods Kievit has constructed a new drying plant in Indonesia. The EUR20 million (US$30 million) investment in the Filtermat dryer will allow the company to produce a broader number of encapsulated products like infant formula and enhanced nutrition ingredients in the wider Asian region. The dryer would also help ensure the group were better positioned to meet the specific demands from its Asian consumers. These extended range of encapsulated products expected to be made available include complex emulsions and more difficult-to-dry ingredient powders. This portfolio includes infant formulas, beverages, enhanced nutrition, savoury and bakery products. View an example of our experience in this industry.

Financial services India - StanChart buys Indian stakes Source: Financial Times, 3 March 2008 Standard Chartered has taken stakes of up to 5% in several Indian banks, seeking a foothold in the country in anticipation of the eventual liberalisation of rules restricting foreign ownership. The Reserve Bank of India has capped investment by foreign banks in a domestic private sector bank at 5%. Buyers of such stakes either hope to launch their own takeover bids or gain leverage over rivals' bids if there is consolidation. Among foreign groups with stakes in Indian banks, units of Citigroup hold 12% of Housing Development Finance Corporation, parent of HDFC Bank, while an affiliate of HSBC holds 5% of Axis Bank. Japan - Sumitomo Mitsui to create top Japan credit card firm Source: The Wall Street Journal Asia, 3 March 2008 Sumitomo Mitsui Financial Group aims to consolidate its four credit-card and consumer-credit companies in October 2008, a move that would create Japan's largest credit card company by assets. Sumitomo Mitsui plans to set up a holding company in October 2008 in which it will place four units - OMC Card Inc., Central Finance Co., Quoq Inc. and Sumitomo Mitsui Card Co.  Sumitomo Mitsui is vying with larger Mitsubishi UFJ Financial Group Inc., which this week announced it will increase its stake in an affiliated credit-card company, as banks focus on individuals amid declining lending to companies. Mitsubishi UFJ Nicos Co. is currently Japan's largest credit-card company. Taiwan - Insurers can raise overseas investment ceiling to 45% source: Asia Pulse, 3 March 2008 Insurance companies in Taiwan are now allowed to raise their overseas investment ceiling from the current 35% of their total funds to 45% in two stages within a period of two years. The Cabinet-level Financial Supervisory Commission (FSC) revealed that an insurance company can apply to increase its investment abroad by 5% in the first year and another 5% in the second year. Taiwan's life insurance companies currently have total funds of NT$7.5 trillion (US$242.9 billion), with the total growing by over NT$1 trillion (US$32.4 billion) each year. In 2007, Taiwan's insurers invested NT$2.3 trillion (US$74.5 billion) abroad, an increase of NT$242 billion (US$7.8 billion) over 2006. View an example of our experience in this industry.

Industrial & logistics China - Shipbuilding tonnage up 30% in 2007 Source: Xinhua, 2 March 2008 China's shipbuilding tonnage jumped 30% to 18.9 million tons in 2007, of which 14.9 million tons of ships in tonnage were exported. According to the National Development and Reform Commission, the number of exported tonnage rose 25.6% and the export value rose 51.1% to US$12.2 billion. China, the world's third-largest shipbuilder after Korea and Japan, grabbed 23% of the world's market share, four percentage points higher than in 2006. China's new shipbuilding orders in tonnage soared 132% to 98.5 million tons in 2007. The figure accounted for 42% of the world's total, up 12 percentage points from 2006. The new amount raised the total orders in tonnage the country held to 158.9 million tons, 33% of the world's figure. The market share was nine percentage points higher than in 2006. Korea - Kumho seals purchase of Korea Express Source: Korea Herald, 4 March 2008 Kumho Asiana Group has signed an official contract to buy a controlling stake in Korea Express, the nation's largest overland shipping company, for W4.1 trillion (US$4.4 billion). The group's two affiliates - Asiana Airlines and Daewoo Engineering & Construction - were chosen as preferred bidders for the purchase of 24 million new shares of Korea Express last month. The 24 million shares are equivalent to a 60% stake in the company. Kumho Asiana Group hopes that the takeover will help the company tap into the fast-growing logistics market. Korea Express is expected to benefit the shipping business of Asiana Airlines, the nation's second largest air carrier. Singapore - NorSun to set up solar wafer factory Source: Channel NewsAsia, 4 March 2008 Norwegian company NorSun is pumping in US$300 million into a new solar wafer factory in Singapore. The facility will produce mono-crystalline wafers which will be used for high-end solar cells, further strengthening Singapore as an emerging key player in the sector. NorSun has become the second solar wafer manufacturer to set up in Singapore, after Renewable Energy Corporation (REC), also from Norway. The factory, which will be NorSun's largest production centre in the world, is expected to produce at least 120 million mono-crystalline wafers every year.The mono-crystalline wafer is the first of its kind in Singapore and is more efficient than the multi-crystalline wafers that are more popular currently. View an example of our experience in this industry.

Information & communication technology   China - Cellphone maker Ningbo Bird to offload joint venture stake Source: China Daily, 4 March 2008 Chinese cellphone maker Ningbo Bird will sell its 50% joint venture stake to French partner Sagem for RMB159 million (US$22.4 million). Zhejiang-based Ningbo Bird set up Ningbo Bird Sagem Electronics with Paris-based Sagem in 2005 to develop and produce cellphones for domestic sales and exports. Many local cellphone manufacturers are facing cash flow pressure as operating costs rise and prices fall. According to the Ministry of Information Industry, 548 million cellphones were made in China in 2007, up 14% from 2006, but phone prices have dropped an average 85%. Japan - Mitsubishi Electric to exit cell phone market Source: Japan Times, 4 March 2008 Japan's Mitsubishi Electric will stop making mobile telephones because of a bleak outlook for the loss-making business, which is facing tough competition. Japan's mobile telephone market has limited room for further growth as most people already own a cellphone and the population is shrinking. Japan, a nation of 127 million people, has more than 100 million mobile phones in operation, creating a major challenge for service providers to achieve growth. Mitsubishi Electric will shift resources to areas with brighter prospects, such as communication infrastructure, home and business security systems, and factory automation systems. The move is the latest case of a Japanese firm realigning its operations, axing or spinning off weak businesses to focus on areas of strength. It comes only weeks after rival Sanyo Electric decided to sell its mobile handset production operations to rival Kyocera. Philippines - Telecom industry to grow at modest pace Source: The Manila Times, 3 March 2008 The Philippines' telecommunications industry is projected to grow at a modest pace in 2008. According to Fitch Rating, core mobile services are rapidly approaching maturity in terms of addressable market and new growth engines are unlikely to deliver significant contributions to earnings. As of 2007, the country's mobile phone penetration stood at 57% or 50 million subscribers. Fixed line subscribers' penetration rate remains stagnant last year at 18.6%. Major operators are turning to new growth areas such as consumer broadband. Fitch said the addressable market for broadband services is expanding rapidly, underpinned by rising personal computer penetration, which stands at 58% in 2006 or 1.4 million units presenting a penetration of 8%. In 2007, the country's broadband penetration rate went up to 4% from 2% in 2006 and 0.8% in 2005. View an example of our experience in this industry.

Life science Asia - Bayer Schering Pharma plans major Asia-Pacific expansion Source: Channel NewsAsia, 3 March 2008 German pharmaceutical company Bayer Schering Pharma plans to aggressively expand its footprint in the Asia-Pacific. The drugmaker is expecting to see strong growth in markets such as China, Korea and India over the next few years, so these will be its key areas of focus. China will continue to be its most important market in the region. Bayer Schering Pharma is aiming to be the number one pharmaceutical company in China in terms of sales by the first half of 2008. The company will build infrastructure in India to build critical mass, while it will expand research activities in Korea. It also plans to reshape its strategy to enter the Vietnam market, while strengthening its position in Indonesia and Pakistan. India - India mulls potentially landmark ruling on generic drugs Source: AFP, 29 February 2008 The Indian Patent Office is set to issue a landmark ruling over the petition of a local drug manufacturer to allow cheaper generic drugs especially for cancer patients for export to poor countries under the "compulsory license" rule. Indian firm Natco Pharmaceuticals made the plea for the country's first so-called "compulsory licence" to the patent office as it bids to make generic copies of Pfizer's Sutent and Roche's Tarceva cancer drugs. The case is attracting interest of giant drug manufacturers across the globe because it could open the floodgates for drug manufacturers to make copies of patented drugs. While it may provide poor countries access to key drugs, critics say it might hinder the development and research of new medicines. Japan - Pharma giants leave Japan for China and Korea Source: BizChinaUpdate, 2 March 2008 Pharmaceutical multinationals are increasingly closing research centres in Japan, and moving their operations to China and Korea. Pfizer said it plans to spend US$300 million on research in Korea, after announcing the closure of its research centre in Japan. Glaxo will also close its Japan R&D centre, and will invest US$40 million on its first China site in Shanghai. Slow growth, regulatory hurdles and high costs are the main reasons for shifting capital-intensive operations, such as research and development, from Japan to lower-cost Asian locations. China also has the added attraction of a huge potential domestic market. which is expected to grow 12-13% in 2008. View an example of our experience in this industry.

Media & leisure China - Gaming firms diversity in China Source: TelecomAsia, February 2008 The online gaming industry in China is poised for more growth, after generating US$970 million in revenues in 2006 on the back of more than 36 million players. KPMG expects the market to grow to US$1.35 billion in 2007 as more individual dabble in online gaming - whether massive multiplayer, casual or platform games. China-made online games accounted for 65% of the domestic market in 2006 and generated US$20 million in export revenues. While 290 mobile games were developed in 2006, 250 of the titles were developed by just 5% of the companies. China - Tongfang invests in SMG's two IPTV subsidiaries Source: China Telecom Newswire, 29 February 2008 Shanghai-listed hi-tech company Tongfang plans to invest RMB150 million (US$21 million) in Shanghai Media Group's two IPTV (Internet protocol television) subsidiaries. Tongfang will invest RMB4.8 million (US$675,500 million) in Shanghai BesTV Media for a 40% stake. It will also spend RMB145.2 million (US$20.4 million) to acquire a 40% stake in BesTV Network Television Technology Development. As of the end of 2007, BesTV Network had 640,000 IPTV subscribers, which accounted for 57% of China's IPTV subscriber base. According to a forecast by Analysys International, China's IPTV subscriber number will top 20 million in 2011. Singapore - Dedicated Indian and kids TV channels Source: Today (Singapore), 1 March 2008 There will soon be television channels dedicated to the Indian community and to kids. "Vasantham", which means "Spring" in Tamil, is targeted for launch in the fourth quarter of 2008. Apart from news and current affairs, the channel will offer the growing Indian community wholesome family-based entertainment programmes, locally produced serials, reality-based and talk shows. Once the current Tamil programmes currently shown on Central migrate to Vasantham, Central will be repositioned as an English channel targeting pre-schoolers and their caregivers in the morning; primary school children in the afternoon and teenagers and young adults in the evening. With these new channels, MediaCorp will be one of Asia's largest media companies by way of free-to-air broadcast offerings. View an example of our experience in this industry.

Previous issues

India to exploit nutraceuticals [29-Feb-08] India sets sight on becoming a global MRO hub [22-Feb-08] High stakes in Australian credit card game [15-Feb-08] Handset players struggle in China despite booming market [6-Feb-08] Malaysia losing out in the FDI race? [1-Feb-08] The push towards convergence gains momemtum in Korea [25-Jan-08]     What you don't know can hurt you  Receive all the key news on your markets, industry and competitors each  week, with alerts for important breaking news, and avoid information  overload with human filtering. Find out more about our Market Monitoring   Service and web-based Intelligence Plaza system by emailing   marketing@fusionc.com.

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