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 personal care, cosmetics and toiletries industry   Product innovation in China's personal care sector is buoyant, but safety concerns  and regulations may become a barrier. Find out what's happening in the industry  and where the trends are heading. In collaboration with the PCHi exhibition.     Request free copy. In the news this week l 14-Mar-08 Foreign game makers accelerate Asian drive

French video games maker Ubisoft Entertainment is looking for a partner in China to help it enter the country's booming online gaming market. According to the Game Committee of the Publishers Association of China, the number of online gamers in China rose 23% to 40.2 million as of December 2007, with sales revenue growing 61.5% to RMB10.6 billion (US$1.5 billion). It is estimated that by 2012, the number of people playing online games in China will reach 84.6 million and sales revenue will reach RMB26.2 billion (US$3.7 billion). Market analysts put the Internet gaming market in Asia at US$2.3 billion, with growth expected to reach US$4 billion by 2010. China, together with Japan and Korea, will continue to be a major market in the region, but Southeast Asian countries such as Vietnam presents a new opportunity for game makers. With a population of more than 80 million, 65% of whom are young, Vietnam can well be a huge market for the online gaming industry. US video game publisher Electronic Arts will soon launch the FIFA Online 2 for Southeast Asia, scheduled for release in the third quarter in Vietnam, Singapore, and Thailand.

Chemical China - Akzo Nobel starts building China plant Source: China Economic Information Service, 8 March 2008 Akzo Nobel, which has set up more than 20 factories and workshops since it entered the Chinese market in the 1980s, has formed a new enterprise to create its largest China production base in the eastern Zhejiang Province. The new chemical enterprise, Akzo Nobel Chemicals (Ningbo) Co., Ltd. was set up on 6 March 2008 in the chemical industrial zone of Ningbo City's Zhenhai District. The enterprise's main products, chelates and ethenamine, are expected to start being manufactured in 2009 and 2010, respectively, with an initial investment of EUR250 million (US$385 million). China - Freudenberg builds lubricant plant in Shanghai Source: Shanghai Daily, 7 March 2008 German company Freudenberg Chemical Specialities KG plans to invest additional RMB200 million (US$28 million) in building a new plant for specialty lubricants in Shanghai. The site, in Qingpu District, is designed for a maximum annual capacity of almost 13,000 metric tons of lubricants as well as release agents, or de-molding agents used to prevent the molded object from sticking to the surface of the mold. Compared to the global stagnant lube demand, China's lube demand rose almost 50% between 1995 and 2005, of which the annual consumption of all types of lubricants is about 4 million to 4.5 million ton, ranking second largest in the world. India - Petrochem sector may face slowdown in investment Source: Business Line, 7 March 2008 The Rs650 billion (US$16 billion) Indian petrochemicals sector, which has announced a capacity expansion programme of three million tonnes in the next three to four years, may face a slowdown in investments due to rising capital costs and global shortage of project equipment and manpower. The 5% duty proposed in the Union Budget on import of naphtha, a key feedstock for the petrochemical sector, is likely to further slowdown investments in this sector. While Reliance Industries is setting up a 900,000 tonne polypropylene plant and a two million tonnes cracker facility in Jamnagar, Haldia Petrochemicals is expanding its capacity from 1 mt to 1.4 mt. The other major players that are mulling expansion include GAIL, Indian Oil Corporation, Supreme and Chemplast. View an example of our experience in this industry.

Consumer & retail Korea - E-commerce growth soars 24.9% in 2007 Source: Korea Herald, 8 March 2008 The market for e-commerce transactions ballooned in 2007 past W500 trillion (US$527 billion). According to the Korea National Statistical Office, the total e-commerce market totaled W516.5 trillion (US$544 billion) in 2007, up by 24.9% from a year ago. The market grew 15.4% in 2006 and 14.1% in 2005. Business-to-business transactions made up 89.9% of the total volume, with W464.4 trillion (US$489 billion). Business-to-government dealings reached W36.8 trillion (US$39 billion) or 7.1% of the total, while business-to-customer transactions amounted to W10.2 trillion (US$11 billion) or 2% and customer-to-customer dealings were W5.3 trillion (US$5.6 billion) or 1%. Singapore - P&G's perfume oils plant will cater to Asian tastes Source: Business Times Singapore, 6 March 2008 Procter & Gamble's (P&G) has opened a new perfume oils plant in Singapore. The fragrance-making plant, which will help meet the growing demand for perfume oils from P&G's other manufacturing operations in Asia, is P&G's first perfume manufacturing operation in Asia. P&G has three other such facilities, located in New Jersey, the United States, Mexico and Germany. The Singapore plant accounts for 20% of perfumes produced worldwide, supplying more than three million kg of perfume a year. By year's end, the plant will expand its output to five million kg. It makes about 20 types of perfume oils currently and expects to increase this to 100 fragrances by the year-end. Thailand - Air Products expands into Thailand Source: AP-Foodtechnology, 5 March 2008 Air Products has opened a new technology centre in Thailand, as it looks to market its food freezing expertise to Asian manufacturers. The UK firm hopes the new centre will allow food manufacturers to explore a range of food preservations solutions, designed to protect the quality and freshness of foods. Thailand is a good country for food manufacturers to invest in. The US commercial Service (USCS) reported that Thailand's food processing and packaging market was worth US$695 million in 2005, and has experienced annual compound growth rates of 20% every year since. Furthermore, there are no restrictions imposed by Thai government on food processing and packaging equipment, and import duties are only 5%. View an example of our experience in this industry.

Financial services Asia - Takaful movement advances in Asia Source: Channel NewsAsia, 11 March 2008 Investments in Islamic insurance globally are expected to triple in value to almost US$10 billion in the next three to five years, and the industry could grow as much as 20% a year in the next decade. The biggest players are likely to be investors from Middle Eastern countries such as Saudi Arabia. In Asia, Malaysia represents the biggest market - worth at least US$570 million. The next big market to watch is Indonesia, because of its massive population base of 220 million. The country has seen the number of Takaful operators selling Islamic insurance products grow from eight to 38 over three years. All this is good news for Singapore because of its status as a financial hub. Many major banks are already gearing up to get a slice of the market. Indonesia - Single-presence policy to drive consolidation Source: Business Times Singapore, 11 March 2008 Malaysia's Malayan Banking (Maybank) and Korea's Kookmin are bidding for an indirect stake in Bank Internasional Indonesia Tbk (BII), Indonesia's sixth-biggest lender. Singapore investment company Temasek is looking to sell its 75% stake in BII's controlling shareholder, Sorak Financial, which owns 55.78% of the Indonesian lender. Temasek also has a controlling stake in Indonesia's fifth-largest lender PT Bank Danamon. Temasek is looking to sell its BII interest because of a new central bank rule preventing institutions from owning more than one bank in Indonesia. The single-presence policy aims to drive consolidation of the financial sector. Currently, there are 130 banks in Indonesia. Taiwan - Credit card transaction amount up 2.4% in 2007 Source: Asia Pulse, 11 March 2008 Taiwan-issued credit card transactions amounted to NT$1.41 trillion (US$46 billion) in 2007, up 2.4% over 2006. According to the Executive Yuan's Directorate General of Budget, Accounting and Statistics, a total of NT$1.33 trillion (US$43.4 billion) of that amount was accounted for by credit card transactions within Taiwan, which also marked an increase of 2.4% over the 2006 level. There were a total of 36.4 million Taiwan-issued credit cards in circulation in 2007, with a total of 19.8 million being used within the last six months. The latter figure marked a drop of 3.6% over the previous year's level. View an example of our experience in this industry.

Industrial & logistics India - India auto part makers in China rush Source: Business Standard, 9 March 2008 India's leading auto component makers such as Talbros, Ashahi Glass, ZF Steering Wheels, GNA Axles, Luxite and Sundaram Brake Linings are exploring the possibility of setting up manufacturing plants in China. Others have also taken their first tentative steps in this direction. Bharat Forge acquired a 52% stake in China's largest foundry unit, FAW Corporation, while Tata Autocomp GY Batteries plans to set up a manufacturing facility in Nanjing. Apart from reliable infrastructure, a managed yuan that makes exports competitive and a flexible hire & fire labour policy, China also has a huge stockpile of commodities available at competitive rates to companies operating in China. And to encourage domestic production of components, the Chinese government stipulates that a vehicle with more than 40% localisation will attract the MFN general duty of between 8% and 12%. Else they attract as much as 25% duty. Japan - Honda plans new minicar plant Source: Bloomberg, 9 March 2008 Honda Motor will spend US$485 million to build a new factory complex in Japan to produce small vehicles as consumers are shifting to less fuel-hungry models. Honda plans to start operating an engine factory in 2009 and assembly lines around 2010 with an annual output capacity of 240,000 vehicles. Honda is Japan's third-largest maker of small vehicles with an engine capacity of 660 cc or less, after Daihatsu Motor of the Toyota group and Suzuki Motor. Demand for smaller vehicles, which account for more than one third of Japan's automobile sales, is rising due to higher fuel prices. Honda also aims to use the new facilities to build up expertise in producing low-cost, high-quality small vehicles to sell in emerging markets in the future. Thailand - SUS makes long-term investment plan for Thailand Source: Thai News Service, 11 March 2008 SUS Corporation, Japan's top factory automation equipment supplier, plans to invest Bt2 billion (US$63 million) within 10 years to build seven more factories in Thailand as its sole manufacturing base outside Japan. Thailand is the only overseas production base of SUS but it has sales and warehouse facilities in China, Singapore, Taiwan and Korea. In January, its first factory, worth Bt330 million (US$10 million), began producing parts used to connect and fasten aluminium frames. By November 2008, the company would begin building a second factory to make aluminium extrusions. View an example of our experience in this industry.

Information & communication technology   Asia - Managed security market to grow 20.4% in 2008 Source: Business Times Singapore, 10 March 2008 The managed security services (MSS) market in Asia-Pacific (excluding Japan) is expected to exceed US$604 million in 2008, representing a 20.4% increase over 2007. IDC expects this market to reach US$1.1 billion in 2012. Managed security adoption is expected to be strongest in mature services markets like Australia, Hong Kong, Korea, New Zealand and Singapore. In Singapore, the MSS market is expected to be worth just over US$50 million in 2008, up 10% from US$45 million in 2007. Reflecting the mature state of the market in Singapore, it is expected to grow at a compound annual rate of 9.8% compared to the regional average of 17.1%. China - Domestic handset growth tapers off Source: ChinaWire, 6 March 2008 China's handset production rose 14% to 548 million units in 2007, and national handset penetration is 41.6%, up 6.3 percentage points from 2006, according to MII figures. But the growth in units shipped was 44% less than 2006, suggesting the device sector's high-speed expansion phase is over. Since 2002, handset production has grown at least 25% per year in most years. More than one-third of all phones were made in Shenzhen, where more than 30 licensed handset manufacturers are based. Yet the concentration of production into one location and intense competition have not brought greater scale. The market is increasingly dominated by foreign brands - Nokia, Motorola, Samsung and Sony Ericsson, who between them have more than 70% of the market. Taiwan - Acer beats Dell for second spot in notebook shipments Source: Business Times Singapore, 6 March 2008 Taiwan's Acer overtook Dell to be the second-largest maker of notebook computers in the fourth quarter of 2007 after its first acquisition in four years added customers in the United States and Europe. DisplaySearch reported that Acer shipped 5.25 million notebooks for a global market share of 16%. Dell fell to third place after shipping 4.64 million for a 14% share, while Hewlett-Packard kept its lead with 6.66 million, or a 20% share. The Taiwanese company overtook Dell in notebooks after buying Gateway Inc in October 2007, as its rival faltered in a strategy of selling through retailers for the first time. The purchase also helped Acer overtake Lenovo Group as the third-biggest PC maker and its lead may lengthen after it won European Union approval to buy Packard Bell BV. View an example of our experience in this industry.

Life science India - Pharma companies face pricing pressure Source: The Times of India, 10 March 2008 Depreciating foreign currencies and pricing pressure in the generics business will eat into bottomline and revenue of Indian pharmaceutical companies in 2008. Last year, most firms' revenues and profits have been adversely affected as a result of increasing pricing pressure, competition in key Western markets, and appreciation in the rupee. Between December 2006 and 2007, the rupee appreciated by 11.6% against dollar. The industry's sales growth last year was around 10%. Though the industry registered a significant profit margin of around 21% last year, it was mainly driven by highly profitable 180-day marketing exclusivity products of a couple of drug companies such as Sun Pharma and Glenmark. Singapore - GSK opens US$83 million R&D pilot plant Source: Today (Singapore), 11 March 2008 GlaxoSmithKline (GSK) has opened its first Asia R&D plant in Singapore, located within GSK's existing manufacturing plant in Tuas. Many pharmaceutical firms in Singapore are increasingly placing greater emphasis on manufacturing innovation by establishing pilot plants to complement their commercial-scale manufacturing facilities. The S$116 million (US$83 million) R&D pilot plant will produce new medicines that are in their final phase of development. Last year, biomedical sciences (BMS) manufacturing output reached a high of S$24 billion (US$17.3 billion), with a value add of S$13.4 billion (US$9.6 billion). This amounts to almost a quarter of the country's total manufacturing value added. Thailand - Compulsory licensing of cancer drugs may save millions Source: Asia Pulse, 10 March 2008 Thailand could save almost Bt4 billion (US$127 million) as a result of compulsory licensing enforcement on key cancer drugs between 2008-2012. The key cancer drugs are Docetaxel, sold as Taxotere by Sanofi Aventis; Erlotinib, sold as Tarceva by Roche; and Letrozole, sold as Femara by Novartis. An official study estimated patients would bear the burden of high medical costs of the three patented cancer drugs between Bt3.7-9.3 billion (US$117 -295 million) million within five years, while the price of patented drugs after negotiations with giant drug firms could cost between Bt2.4-4.6 billion (US$76-146 million) over the same period. The cost of imported versions of generic drugs was estimated only between Bt321-909 million (US$10-29 million). View an example of our experience in this industry.

Media & leisure Asia - Electronic Arts eyes Asian growth Source: Channel NewsAsia, 7 March 2008 Video game producer Electronic Arts (EA) is aiming for a bigger slice of the video and mobile game market in Asia-Pacific (APac). Its latest partnership is with Singapore-based IAHGames to operate the popular online football video game FIFA Online 2 to tap into the 20 million strong Southeast Asian online gaming market. EA also plans to grow its online game development arm in its regional HQ in Singapore to match production in its Korean studios. Besides online gaming, EA also wants a bigger market grab in the mobile game segment - a lucrative one that could be worth US$4.5 billion in APac by 2010. EA will be aggressively pursuing the segment in Asia. China - Digital TV user base increases by 92.4% in 2007 Source: China Telecom Newswire, 7 March 2008 China's digital TV user base increased by 13.05 million households, or 92.4% year-on-year, to 27.19 million households. According to CCID Consulting, 12.05 million were cable digital TV users and the remaining 1 million used satellite, terrestrial or IPTV digital technology. By the end of 2007, there were 143 million traditional cable TV subscribers in China. The large scale of the cable TV market helped to push up the number of cable digital TV subscribers. CCID Consulting predicts that the number of households that have cable digital TV will reach 39.68 million by the end of 2008, and by 2012, there will be 123.48 million households with cable digital TV, with about 44 million households still using traditional cable. Singapore - MDA awards first niche TV licence to VeeV Source: Channel NewsAsia, 6 March 2008 The Media Development Authority of Singapore (MDA) has issued the first Niche Subscription TV Licence to VeeV Interactive Pte Ltd. The Niche Subscription TV Licence is part of a two-tier licence framework MDA introduced in 2007 to facilitate the growth of Internet Protocol Television (IPTV) services in Singapore by offering operators greater flexibility to roll out services for different market segments. The other licence category is the Nationwide Subscription TV Licence, which caters to operators targeting the mass market. The first nationwide IPTV licence was awarded to SingNet Pte Ltd in January 2007 for its mioTV service. View an example of our experience in this industry.

Previous issues

Asian players withdraw from fiercely competitive Chinese handset market [7-Mar-08] 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]    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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