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 20-Mar-08 India's chemical sector benefits from China's cut in export rebates

India may now have an edge over China in chemical manufacturing as the Chinese government has withdrawn the 17% VAT refund on chemical export from July 2007. The Chinese commands over 70% of the global US$2.4 trillion chemical industry. But the cancellation of rebates on export taxes has rendered the Chinese chemical manufacturing units uncompetitive in the global market. As a sign of things to come, World Bank affiliate International Finance Corporation announced it will pick up 25% equity stake in Ahmedabad-based Meghmani Finechem's upcoming chlor-alkali project, going beyond its normal investment of 20% stake in any project. Zhejiang Lonsen Group Stock Company of China has also entered into a joint venture with Ahmedabad-based Kiri Dyes and Chemicals Limited to set up a unit at Vadodara in Gujarat for the production of reactive dyes. More than US$6.4 billion is expected to be invested in India's chemical processing industry in 2008.

Chemical India - IFC becomes strategic investor in Meghmani Finchem Source: SiliconIndia News, 15 March 2008 World Bank affiliate International Finance Corporation (IFC) will invest Rs461 million (US$11.4 million) in Meghmani Finchem's Rs5.5 billion (US$137 million) chlor-alkali project to come up at Dahej in Bharuch district in south Gujarat. The amount represents 25% of the total equity of the project, going over the normal norm of 20%. After infrastructure, it is the chemical industry in India that is set to witness tremendous growth in the coming years. According to IFC manager for chemicals Lance Crist, the chemical industry in India will grow from US$30 billion in 2005 to US$60 billion by 2010. India - Kiri Dyes enters joint venture with Zhejiang Lonsen Source: IRIS News Digest, 15 March 2008 Ahmedabad-based Kiri Dyes and Chemicals limited (KDCL) has entered into a joint venture with Zhejiang Lonsen Group Stock Company of China to set up a manufacturing unit at Vadodara in Gujarat for production of reactive dyes, which are used in cotton textile, leather, and paint and printing ink industries. KDCL and Zhejiang Lonsen Group have inked a memorandum with an initial investment of US$10 million in 60:40 ratio. The joint venture will start with an initial production capacity of 20,000 tonnes a year. The capacity will be enhanced to 50,000 tonnes a year after successful execution of the project. The joint venture is expected to become operational by the end of 2008. Korea - S-Oil establishes venture with Total Source: Korea Herald, 18 March 2008 Seoul-based refinery S-Oil Corporation will set up a joint lubricant venture with oil company Total S.A. to further tap the fast-growing global lubricant demand. The two companies agreed to hold a 50% stake each in S-Oil Total Lubricants Co., which they will jointly manage. S-Oil and Total agreed to integrate their lubricant-manufacturing facilities into S-Oil's plant in Onsan, South Chungcheong Province. The company plans to raise the output from 1,100 barrels per day to 2,500 barrels by next year. The new venture will produce a variety of products, ranging from automotive lubricants to industrial lubricants. View an example of our experience in this industry.

Consumer & retail China - E-commerce gaining a foothold in the mainland Source: Agence France Presse, 16 March 2008 Fifty-five million of China's Internet users shopped online in 2007 for a total turnover of RMB59.4 billion (US$8.4 billion), according to the China Internet Research Centre. This is up from 43 million online shoppers in 2006, when the value of transactions stood at US$4.3 billion. By 2011, the centre projected that online spending will hit RMB406 billion (US$57 billion) as more of China's Internet users turn to online shopping. Yet the level of online spending remains modest: about RMB1,000 (US$140) in 2007 per consumer, or 0.64% of total retail spending in China. Growth in its e-commerce has lagged due to consumer concerns about reliable online payment methods and counterfeit goods. India - Beer market to froth with MNC brands Source: Business Standard, 19 March 2008 About half-a-dozen beer brands are making their India debut. These are some of the best-known names in the business: Lowenbrau, Stella Artois, Beck's, Baron's Strong Beer, Tiger, Cobra Bite and even an array of British ales.     The country's beer market is estimated to be 137 million cases a year and growing at 30% annually. That and the reduction in additional customs duty on liquor have made it a land of opportunity for multinational companies.  India - Retail boom rolls into the suburbs Source: Business Standard, 17 March 2008 Real estate player RDB Group is foraying into the organised retail business with an estimated investment of Rs2 billion (US$50 million). Giving the cluttered Calcutta market a miss, RDB plans to set up 50 shopping malls in West Bengal in three years. Regent Station, which borrows its name from the company's tobacco brand Regent, will be a one-stop shop for FMCG, garments, jewellery and footwear, along with food court, recreation area and car park. Ten outlets have been planned in Bengal in the initial phase. It's first shopping mall will be opened in Barasat in March 2008. Nine other outlets - on 20,000 sq ft to 65,000 sq ft - will come up in Hatibagan, Behala, BT Road, Sinthee More, Uttarpara, Kharagpur and Durgapur, Haldia and Bolpur. View an example of our experience in this industry.

Financial services Asia - Private banking industry booming Source: Business Times Singapore, 17 March 2008 Asia's private banking industry is booming. According to Boston Consulting Group (BCG), wealth managers in Asia reported a median pre-tax margin of 45.5% in 2006, beating the overall global profitability of 34.7%. The industry is expected to grow 20-30% a year, in line with the rising number of high-net worth individuals and greater awareness that will shift cash sitting in retail banks to private banking accounts. Much of the wealth generated is coming from China and India, which accounted for over 64% of the wealth in Asia Pacific. BCG estimates that Asia Pacific ex-Japan has some US$10.6 trillion in asset under management, behind Japan's US$11.9 trillion, Europe's US$33 trillion and North America's US$36.2 trillion. China - Limits on rural banks to ease Source: Reuters, 14 March 2008 China plans to relax a series of restrictions on its rural banks in 2008. The China Banking Regulatory Commission (CBRC) plans to relax limits on equity stakes that individuals and non-financial firms can hold in small and medium-sized rural financial institutions. CBRC also plans to relax geographical restrictions, allowing some rural banks to do business across regions. Rural commercial lenders are currently limited to operating in a single province. Beijing is looking to stimulate investment in the countryside to reduce a growing income gap with the cities, and is encouraging the development of rural lenders, many of which were cobbled together from the country's beleaguered rural credit cooperatives starting in 2001. Thailand - Thais using more plastic Source: Thai News Service, 14 March 2008 The number of credit cards in use in Thailand as of the end of January 2008 surged by 995,763. The Bank of Thailand reported the latest tally of credit cards as of the end of January totalled 11,998,570, up 9.1% from the same period the year before. Of this, 4,668,072 cards were issued by local commercial banks; 1,301,989 by foreign bank branches; and 6,028,768 by non-banking institutions. Spending through credit cards as of the end of January 2008 totalled Bt83.2 billion (US$2.6 billion), up 12.2% from the same period the year before. Of this, Bt60.6 billion (US$1.9 billion) was spent locally and Bt2.7 billion (US$86 million) was used abroad. View an example of our experience in this industry.

Industrial & logistics India - Merrill pumps in US$74 million into logistics JV Source: The Economic Times, 17 March 2008 Merrill Lynch has invested close to Rs3 billion (US$74 million) to set up a joint venture company with the DRS Group, a Third Party Logistics (3PL) company based out of New Delhi. The new entity, DRS Warehousing Corporation, will build and operate eight warehouses located in various parts of the country. Merrill Lynch is expected to get a 70% stake in the joint venture, while the DRS Group will hold the remaining stake.   Investors and 3PL companies are investing heavily in warehousing, with analysts expecting Rs20 billion (US$492 million) in investment in the next three years. There is a reason for this. As Central Sales Tax has been phased out, manufacturers can outsource warehouse management to third parties. Earlier, in order to prevent being taxed under CST, manufacturers had to maintain multiple warehouses to show movement of goods from one company warehouse to another. Korea - Rising materials costs wear away at carmakers' profits Source: Korea Herald, 17 March 2008 Rising raw materials costs are threatening the profitability of the Korean automotive industry, despite the reprieve granted by the won's fall against the dollar. Hyundai Kia Automotive Group, Korea's largest carmaker, is under pressure to increase payments to suppliers of parts made with aluminum, cast metals, rubber and other materials used in automobiles so as to compensate for rising production costs borne by the suppliers. Increases in materials costs will also push up the price of Hyundai Motor and Kia Motors' products, offsetting any gains in price competitiveness brought on by the won's depreciation against the dollar. Singapore - China Huaneng snaps up Tuas Power Source: China Economic Review, 14 March 2008 China's largest power producer, China Huaneng Group, has clinched Singapore's Tuas Power for S$4.2 billion (US$3 billion). Temasek Holdings, the investment arm of the Singapore government, has signed a share purchase agreement with Huaneng subsidiary SinoSing Power for the 100% sale of Tuas Power. The sale of Tuas Power by Temasek, the investment arm of the Singapore government, is the first step in the city-state's plan to liberalise its power sector. Two other major power generators, PowerSeraya and Senoko Power, will also be sold off in coming months. The entire divestment exercise is scheduled to be completed by the middle of 2009. View an example of our experience in this industry.

Information & communication technology   China - Sharp eyes China's cell phone market Source: Industry Updates, 14 March 2008 Sharp, the No 1 cell phone maker in Japan, plans to march into China's cell phone market in June 2008 at the earliest as the Japanese domestic market is close to saturation. China's cell phone market is expected to reach a volume of 200 million sets in 2009, four times of the current Japanese market scale. Sharp plans to take advantage of China's rising demand for high-end mobiles, which Sharp is adept at, and target the country's wealthy group as potential consumers. With its new commercial plan, Sharp will become the only Japanese cell phone player in China as NEC, Panasonic and other Japanese companies quit the Chinese market respectively since 2006. India - Mobile users to reach 500 million by 2010 source: Bloomberg, 18 March 2008 India last year added 84 million mobile-phone subscribers, or more than the population of Germany, to end with 233.6 million. Telecommunications Secretary Siddhartha Behura predicted that Indian will double its number of subscribers to 500 million by 2010. Record subscriber additions are crowding the airwaves, prompting companies including Bharti Airtel, India's largest mobile-phone operator, to seek more spectrum. The airwaves are controlled by the country's army, which is in talks with the government about allocating capacity. The telecommunications ministry believes the country will auction so-called third-generation airwaves by the end of the year. Korea - Samsung eyes built-in appliances market Source: Korea Herald, 19 March 2008 Samsung Electronics aims to sell W1.2 trillion (US$1.2 billion) worth of built-in appliances globally by 2012. The domestic market for built-in appliances, estimated to be worth W570 billion (US$562 million) in 2008, is projected to grow to W750 billion (US$739 million) by 2010 and to W1 trillion (US$986 million) by 2012. The Korean firm has introduced its new lineup of built-in kitchen appliances, including the 'True Built-In' refrigerator, in Seoul. The side-by-side refrigerator, with an LCD screen on one door, provides consumers with pre-loaded recipes, tips on preserving food, and a digital photo album. The company plans to expand its business-to-business channels, while continue to pursue direct sales to customers. View an example of our experience in this industry.

Life science China - US drug makers stick by China Source: The Boston Globe, 13 March 2008 United States life sciences firms are expanding manufacturing operations in China despite safety concerns. Waltham's Inverness, which makes pregnancy tests and other diagnostic products, plans to close its plant in Bedford, England, and move most of the work to China, where it has plants in Hangzhou and Shanghai. Covidien, which makes surgical instruments and respiratory equipment in Shanghai, will triple its workforce there to 300. In the United States, drug imports from China have more than quadrupled in the past five years to US$401 million in 2007, according to the International Trade Administration. Roughly 3,000 Chinese companies have registered with the FDA to market medical devices in the United States. There are plenty of reasons for US businesses to operate in China, including lower expenses and the opportunity to gain a foothold in the growing Asian market. India - Pharma market valued at US$7 billion in 2006-07 Source: Press Release, 15 March 2008 India has one of the fastest growing pharmaceutical markets in the world. According to RNCOS, this market was valued at over US$7 billion in 2006-07. Driven by a huge patient base, increasing incomes, improving healthcare infrastructure and strong penetration of health insurance, the pharmaceutical market is expected to grow more than double its size in the next five years. The Indian pharmaceutical market at present is highly fragmented, with the top three companies having a market share of around 5% each. However, introduction of the product patent regime is likely to result in heavy consolidation in future. Japan - Welcia Kanto to integrate business with Takada Pharmacy Source: Jiji Press, 14 March 2008 Welcia Kanto, a drug store chain affiliated with major retailer Aeon, has reached a basic agreement on business integration with smaller peer Takada Pharmacy. The two firms will establish a joint holding company on 1 September 2008. Through the business integration, Welcia Kanto and Takada Pharmacy will aim to strengthen their competitiveness in the Kanto region of eastern Japan, including Saitama Prefecture, and the Chubu central region, including Shizuoka Prefecture. Welcia Kanto is beefing up its operations by actively pursuing mergers and acquisitions. As of end of February, Welcia Kanto had 297 drug stores, and Takada Pharmacy operated 98 outlets. View an example of our experience in this industry.

Media & leisure China - Online game market hit US$1.8 billion in 2007 Source: Xinhua News Agency, 15 March 2008 China's online game market surged 66.7% year-on-year to hit RMB12.8 billion (US$1.8 billion) in 2007. Shanda ranked the first with a market share of 19.3% while the runner-up Netease took 15.1%, followed by Giant Interactive Group who took 11.9%. iResearch predicts China's online game market will hit RMB19.1 billion (US$2.7 billion) in 2008 and RMB40.1 billion (US$5.7 billion) in 2011. Meanwhile, Giant Interactive Group has partnered Huawei Technologies to research server platforms for online game applications. The research partnership with Huawei will further extend Giant's competitive strengths in terms of server technology. China - China has world's biggest internet population Source: TelecomAsia, 14 March 2008 China has overtaken the United States in the number of online users to become the world's largest internet market. The China Internet Network Information Center (CNNIC) says China's internet users numbered 210 million at year-end 2007, while Nielsen/NetRatings put the United States total at 216 million. Beijing-based consultancy BDA says that by now China will have "comfortably surpassed" the United States as the biggest market by user numbers. BDA says the United States still far outstrips China in the value of internet content, advertising and e-commerce, but expects e-commerce to become the next boom sector in China as businesses and retailers take advantage of the mass market of consumers already online. India - Telecom firms face uphill climb in IPTV Source: TelecomAsia, 13 March 2008 Indian telecom firms, seeking to increase revenue and stimulate demand by offering IPTV services, face hurdles of high costs. IOL Netcom and Aksh Optifibre are battling high costs as television broadcasters charge telecom companies much more than cable operators for programme feeds. IOL and Aksh have tied up with MTNL in Mumbai and Delhi and with BSNL in other areas to provide IPTV services on the state-owned carriers' broadband network. Another big hurdle to popularising IPTV is the low broadband penetration. TRAI figures show India's broadband subscriber base at 3.24 million at the end of January 2008, with less than one million new users added between April 2007 and January 2008. View an example of our experience in this industry.

Previous issues

Foreign game makers accelerate Asian drive [14-mar-08] 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]    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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