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News » Society » VIDEO: Luxury yacht sales boom in China |
- VIDEO: Luxury yacht sales boom in China
- 'Flies, tigers' targeted in Xi's corruption battle
- VIDEO: China to develop shale gas sector
- 'Flies, tigers' targeted in Xi's corruption battle
- Bird flu `epidemic' sparks chicken cull
- Abe tests waters as Xi gets letter from envoy
- Hawkish Japanese Prime Minister Shinzo Abe held out an olive branch to China yesterday, sending a letter to Beijing's leader-in-waiting to be hand-delivered by a coalition ally.
- Flies to tigers in graft crosshairs
- Censored 'Skyfall' angers Bond fans
- Japanese envoy arrives for talks on isles dispute
- Cough joins duck and opera ...
- 10 dead, 3 missing at colliery
- 'Flies, tigers' targeted in Xi's corruption battle
- Gangnam dance sparks action on wages
- Punishments for delays
- Professional guards to tackle threat overseas
- Official suspended after student son given a job
- Women claim hubby's income
- China’s Richest Man Signs Manchester United Sponsor Deal
- Deal Gone Wrong Adds to Caterpillar’s Troubles in China
| VIDEO: Luxury yacht sales boom in China Posted: 22 Jan 2013 08:24 PM PST Sales of luxury yachts are booming in China, as the country's super rich are finding a new pastime to match the status of their wealth. |
| 'Flies, tigers' targeted in Xi's corruption battle Posted: 22 Jan 2013 09:01 AM PST Party chief Xi Jinping yesterday took his campaign against corruption to the petty bureaucracy and minor infractions of lowly officials who are the bane of many Chinese people's everyday lives. Xi said it was just as important to go after the lowly "flies" as it was to tackle the top official "tigers" in the battle against graft. "We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people," he told a meeting of the Party's Central Commission for Discipline Inspection. "No exception will be made when it comes to Party discipline and the law," Xi said. "Cases will be investigated completely and no leniency will be meted out no matter who is involved." Officials must not be allowed to get away with skirting rules and orders from above or choosing selectively which policies to follow, Xi said. "The style in which you work is no small matter, and if we don't redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our Party and the people, and we will lose our roots, our lifeblood and our strength," Xi said. He called for "a disciplinary, prevention and guarantee mechanism" to be set up to prevent corruption. Since his election as general secretary of the Communist Party in November, Xi has vowed to root out corruption, warning that the Party's survival was at risk. The Party chief also called for determined efforts to oppose ostentation and reject hedonism and extravagance, banning officials from making long, boring speeches or being given red carpet welcomes, and ordering local governments to stop holding alcohol-fueled banquets. Xi asked for efforts to strengthen national anti-corruption legislation and relevant intra-Party regulations to ensure national organs exercise their power within the boundaries of the law. "The mainstream of our cadres and Party members is good," he said. "But we should soberly recognize that corruption is still prone to occur or happen quite frequently in certain areas." He said the fight against corruption would be long-term, complicated and arduous. Efforts should be made to prevent and overcome selfish localism and departmentalism, and nobody or no department should be allowed to disregard policies introduced by the Central Committee, he said. "We must not relax the use of penalties if we want to rule Party members strictly," he said. Anyone who exercises power should serve the people, be accountable to the people and accept supervision by the people, Xi said. A fight against privilege should be waged in combating corruption and building a clean government, he said. A total of 4,698 county-level officials or higher-level cadres were punished by disciplinary watchdogs in 2012 and 961 officials at county-level or above were transferred to judicial bodies. Among them were Liu Zhijun, former railways minister, Huang Sheng, former vice governor of east China's Shandong Province, and Tian Xueren, former vice governor of northeast China's Jilin Province. Their cases have been transferred to judicial bodies. Two other provincial-level officials are under investigation. Zhou Zhenhong, a former member of the Standing Committee of the CPC Guangdong provincial committee, was sacked for suspected "serious discipline violations" in January last year, and Li Chuncheng was sacked as deputy Party chief of Sichuan Province for suspected "serious discipline violations" in December. Nearly 73,000 people were punished for corruption or dereliction of duty in 2012. This posting includes an audio/video/photo media file: Download Now |
| VIDEO: China to develop shale gas sector Posted: 22 Jan 2013 06:09 PM PST China has issued 16 companies with licences to explore for shale gas, as Beijing hopes to develop an industry as vibrant as the one in the United States. |
| 'Flies, tigers' targeted in Xi's corruption battle Posted: 22 Jan 2013 09:01 AM PST Party chief Xi Jinping yesterday took his campaign against corruption to the petty bureaucracy and minor infractions of lowly officials who are the bane of many Chinese people's everyday lives. Xi said it was just as important to go after the lowly "flies" as it was to tackle the top official "tigers" in the battle against graft. "We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people," he told a meeting of the Party's Central Commission for Discipline Inspection. "No exception will be made when it comes to Party discipline and the law," Xi said. "Cases will be investigated completely and no leniency will be meted out no matter who is involved." Officials must not be allowed to get away with skirting rules and orders from above or choosing selectively which policies to follow, Xi said. "The style in which you work is no small matter, and if we don't redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our Party and the people, and we will lose our roots, our lifeblood and our strength," Xi said. He called for "a disciplinary, prevention and guarantee mechanism" to be set up to prevent corruption. Since his election as general secretary of the Communist Party in November, Xi has vowed to root out corruption, warning that the Party's survival was at risk. The Party chief also called for determined efforts to oppose ostentation and reject hedonism and extravagance, banning officials from making long, boring speeches or being given red carpet welcomes, and ordering local governments to stop holding alcohol-fueled banquets. Xi asked for efforts to strengthen national anti-corruption legislation and relevant intra-Party regulations to ensure national organs exercise their power within the boundaries of the law. "The mainstream of our cadres and Party members is good," he said. "But we should soberly recognize that corruption is still prone to occur or happen quite frequently in certain areas." He said the fight against corruption would be long-term, complicated and arduous. Efforts should be made to prevent and overcome selfish localism and departmentalism, and nobody or no department should be allowed to disregard policies introduced by the Central Committee, he said. "We must not relax the use of penalties if we want to rule Party members strictly," he said. Anyone who exercises power should serve the people, be accountable to the people and accept supervision by the people, Xi said. A fight against privilege should be waged in combating corruption and building a clean government, he said. A total of 4,698 county-level officials or higher-level cadres were punished by disciplinary watchdogs in 2012 and 961 officials at county-level or above were transferred to judicial bodies. Among them were Liu Zhijun, former railways minister, Huang Sheng, former vice governor of east China's Shandong Province, and Tian Xueren, former vice governor of northeast China's Jilin Province. Their cases have been transferred to judicial bodies. Two other provincial-level officials are under investigation. Zhou Zhenhong, a former member of the Standing Committee of the CPC Guangdong provincial committee, was sacked for suspected "serious discipline violations" in January last year, and Li Chuncheng was sacked as deputy Party chief of Sichuan Province for suspected "serious discipline violations" in December. Nearly 73,000 people were punished for corruption or dereliction of duty in 2012. This posting includes an audio/video/photo media file: Download Now |
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| Censored 'Skyfall' angers Bond fans Posted: 22 Jan 2013 09:10 AM PST Chinese film fans are up in arms over cuts made to "Skyfall," complaining that censors have ruined the latest film in the James Bond franchise. An edited version hit Chinese screens on Monday, prompting industry insiders to call for reform of the country's movie review system. Shi Chuan, a professor from Shanghai University's school of film & TV arts and technology, proposed the enaction of relevant laws and the establishment of norms for movie censors to follow. Changes to the latest Bond movie include the removal of a scene in Shanghai in which a Chinese security guard is shot by a French hitman, as well as changes to Bond's lines inquiring about a woman being forced into prostitution. "Movie regulators should respect the producers' original ideas, rather than chopping scenes arbitrarily," Shi said. However, he said he believed the censorship system was necessary for China's film industry. The content of imported movies must conform with local laws, as well as respect local culture and tradition, he said. On the Chinese mainland, all imported movies are subject to reviews by the State Administration of Radio, Film and Television. Usually, censors cut violent or steamy scenes before movies hit cinemas. However, moviegoers sometimes complain about the alterations. Such cases include Ang Lee's 2007 movie "Lust, Caution," which was reportedly culled by 30 minutes. Some movie experts have also complained about restrictions on sensitive topics. During an annual session of China's political advisory body in March last year, Yin Li, vice chairman of the China Film Association, said Chinese filmmaking faces too many restrictions regarding sensitive topics such as public security, diplomacy, ethnic minorities and religion. "I hope China can offer more freedom to filmmakers so that a more favorable environment can be created for the country's movie industry." |
| Japanese envoy arrives for talks on isles dispute Posted: 22 Jan 2013 09:10 AM PST CHINA has welcomed a Japanese envoy for talks as both sides took steps to cool tensions over an island dispute that has raised fears of an armed confrontation. Natsuo Yamaguchi, leader of a junior party in the ruling coalition of Japanese Prime Minister Shinzo Abe, arrived in Beijing yesterday. Yamaguchi, whose schedule has not been announced, is not a member of the government so his meetings in Beijing represent a kind of quiet diplomacy that could allow for a franker exchange of views than official talks might. The visit is part of China's "normal relations and contact with friendly Japanese political parties and organizations," Foreign Ministry spokesman Hong Lei told reporters. "The dealings can help solve problems and move forward healthy relations." Yamaguchi made no comments on his arrival but told reporters in Tokyo he hoped his four-day trip would help ease months of friction over the Diaoyu Islands in the East China Sea. "It is important for us to have consultations to normalize our relationship," Yamaguchi said. Chinese media said Yamaguchi would deliver a letter from Abe addressed to Chinese leader Xi Jinping. |
| Cough joins duck and opera ... Posted: 22 Jan 2013 09:09 AM PST FOR lawmakers and political advisers at the ongoing annual sessions in China's capital, the city's new association with the "Beijing cough" is far less welcome than its fame for roast duck and opera. Some of them say the label, used to mock Beijing's poor air quality, is insulting, but most acknowledge that the term depicts reality and is prompting efforts to fight pollution. With the first session of the 14th Beijing People's Congress opening yesterday and the first session of the city political advisory body having opened on Monday, the "Beijing cough" has become a hot topic. "Teachers and students from our academy need to take deep and quick breaths while practicing traditional operas, which makes them inhale much more pollutants than ordinary people," said Zhou Long, deputy head of the National Academy of Chinese Theater Arts, and also a political advisor of the capital. The term "Beijing cough" has been in use since as early as the 1990s among foreigners, many of whom experienced chronic respiratory problems when they arrived in Beijing due to the city's dry and polluted air. But it did not become well-known until recently, when more health problems directly attributable to the current air pollution were reported. As an increasing number of residents are suffering from coughing, sneezing or tight chests amid the city's heavy recent smog, netizens have started labeling the phenomenon the "Beijing cough." With the debate raging, the Beijing municipal government has vowed to strengthen efforts to curb air pollution. Measures include taking 180,000 old vehicles off the road, promoting clean-energy cars and closing some 450 heavily polluting plants, according to the work report by acting mayor Wang Anshun at yesterday's opening session. Deputies to the congress will further discuss air pollution control during the session, which lasts until next Monday and will elect a new mayor. Beijing has witnessed persistent smog since early this month. Air quality indexes were off the charts for seven days. The smog was dispersed by a cold front with wind last week, but soon returned. Andrew McCormick, an American computer game designer who has worked in Beijing for three years, has made plans to leave the city. McCormick, a 35-year-old newly-wed who is planning to have a baby, said: "I don't want my children to grow up in the polluted environment." He said he did not expect the government to change the situation soon, as battling air pollution was a long-term task. Internet users have mocked the smog as "the dirtiest air in history" in Beijing as well as other cities shrouded by haze. The Beijing Emergency Medical Center received 535 patients with respiratory diseases from January 7 to 14 - 54 percent more than the same period last year. This posting includes an audio/video/photo media file: Download Now |
| 10 dead, 3 missing at colliery Posted: 22 Jan 2013 09:02 AM PST Rescuers take a break at the Jinjia colliery in Panxian County, Guizhou Province, where authorities yesterday confirmed that the bodies of 10 miners had been discovered four days after a sudden surge of gas and coal. The search for another three missing workers is continuing. This posting includes an audio/video/photo media file: Download Now |
| 'Flies, tigers' targeted in Xi's corruption battle Posted: 22 Jan 2013 09:01 AM PST Party chief Xi Jinping yesterday took his campaign against corruption to the petty bureaucracy and minor infractions of lowly officials who are the bane of many Chinese people's everyday lives. Xi said it was just as important to go after the lowly "flies" as it was to tackle the top official "tigers" in the battle against graft. "We must uphold the fighting of tigers and flies at the same time, resolutely investigating law-breaking cases of leading officials and also earnestly resolving the unhealthy tendencies and corruption problems which happen all around people," he told a meeting of the Party's Central Commission for Discipline Inspection. "No exception will be made when it comes to Party discipline and the law," Xi said. "Cases will be investigated completely and no leniency will be meted out no matter who is involved." Officials must not be allowed to get away with skirting rules and orders from above or choosing selectively which policies to follow, Xi said. "The style in which you work is no small matter, and if we don't redress unhealthy tendencies and allow them to develop, it will be like putting up a wall between our Party and the people, and we will lose our roots, our lifeblood and our strength," Xi said. He called for "a disciplinary, prevention and guarantee mechanism" to be set up to prevent corruption. Since his election as general secretary of the Communist Party in November, Xi has vowed to root out corruption, warning that the Party's survival was at risk. The Party chief also called for determined efforts to oppose ostentation and reject hedonism and extravagance, banning officials from making long, boring speeches or being given red carpet welcomes, and ordering local governments to stop holding alcohol-fueled banquets. Xi asked for efforts to strengthen national anti-corruption legislation and relevant intra-Party regulations to ensure national organs exercise their power within the boundaries of the law. "The mainstream of our cadres and Party members is good," he said. "But we should soberly recognize that corruption is still prone to occur or happen quite frequently in certain areas." He said the fight against corruption would be long-term, complicated and arduous. Efforts should be made to prevent and overcome selfish localism and departmentalism, and nobody or no department should be allowed to disregard policies introduced by the Central Committee, he said. "We must not relax the use of penalties if we want to rule Party members strictly," he said. Anyone who exercises power should serve the people, be accountable to the people and accept supervision by the people, Xi said. A fight against privilege should be waged in combating corruption and building a clean government, he said. A total of 4,698 county-level officials or higher-level cadres were punished by disciplinary watchdogs in 2012 and 961 officials at county-level or above were transferred to judicial bodies. Among them were Liu Zhijun, former railways minister, Huang Sheng, former vice governor of east China's Shandong Province, and Tian Xueren, former vice governor of northeast China's Jilin Province. Their cases have been transferred to judicial bodies. Two other provincial-level officials are under investigation. Zhou Zhenhong, a former member of the Standing Committee of the CPC Guangdong provincial committee, was sacked for suspected "serious discipline violations" in January last year, and Li Chuncheng was sacked as deputy Party chief of Sichuan Province for suspected "serious discipline violations" in December. Nearly 73,000 people were punished for corruption or dereliction of duty in 2012. |
| Gangnam dance sparks action on wages Posted: 22 Jan 2013 08:55 AM PST EVERY year, with the approach of Spring Festival, there seem to be battles between migrant workers and their bosses concerning unpaid wages. They often seem to involve outraged workers storming office buildings and triggering brawls but, this year, a group of construction workers in Wuhan, capital of Hubei Province, chose a more peaceful way - they danced Gangnam Style. Headed by their team leader surnamed Lu, the group were seen dancing in front of a music club in the city's Dongxihu District, attracting a crowd of passers-by, yesterday's Wuhan Evening News reported. "As the Spring Festival is coming, the workers all want to go back home. They ask for money from me every day," Lu said. To lessen their anger and frustration, Lu paid the workers more than 10,000 yuan out of his own pocket, but the boss was refusing to answer his phone or repay him the money, he said. He said he decided to lead the workers in the popular dance to attract media attention. The company owed 40 workers a total of 233,000 yuan (US$37,423), the paper reported. A 61-year-old worker surnamed Zeng said he was owed 20,000 yuan in wages. Another one surnamed Luo said he was still waiting for wages of up to 9,000 yuan to cover the education expenses of his three children. "If I fail to get the money, I can't go back to my hometown to celebrate the Spring Festival, and my children will be unable to go to school," Luo said. Their boss said the entertainment management company which contracted the building project hadn't paid as promised when the project was completed in November. However, the company claimed the construction had quality problems and said the builder had refused to carry out repairs. After the dance performance, a manager surnamed Xiao said: "I will call the quality supervision authority to check. If the building passes the check, I will pay all of the money." |
| Posted: 22 Jan 2013 08:53 AM PST MIGRANTS may find it easier to get their unpaid wages this year after China's supreme court yesterday specified punishments for delays. Anyone neglecting to pay a worker who is owed three months' wages or more and the amount is from 5,000 (US$804) to more than 20,000 yuan, or who owes more than 10 workers a total of 30,000 yuan to more than 100,000 yuan, faces a maximum of three years in jail. Anyone who resorts to violence when workers come to claim unpaid wages, causing them serious injuries, will face a maximum seven-year sentence. That's also the maximum term for a delay that causes a worker's child to drop out of school. |
| Professional guards to tackle threat overseas Posted: 22 Jan 2013 08:16 AM PST IN sub-zero winter cold at an army base in Beijing, trainees wake before dawn to practice martial arts and evasive driving, while a Portuguese ex-special forces soldier barks commands. "We are not polite any more... we are only efficient," declares Marco Borges - his words rapidly translated into Chinese. But despite their dark uniforms and heavy black boots these are not the latest recruits to some new unit of China's People's Liberation Army. Instead, the roughly 40-strong group, mostly with previous military experience, are on a commercial training course to become elite bodyguards to protect Chinese firms abroad. The best will be recruited by the school's sister company, Genghis Security Advisor, which offers protection for China's wealthiest citizens from attacks and kidnapping at home and abroad. Chinese citizens have been targeted by hostage-takers in Pakistan and Indonesia to as far-flung countries like Nigeria and Sudan. Chinese resource firms also have a presence in troubled Afghanistan. "There are lots of rich people in China who have businesses in Europe, Africa, everywhere," said Borges, an imposing presence in his black uniform and beret. "They are what we would call, in professional language, soft targets." GSA's founder Chen Yongqing is a former PLA member and learned bodyguard techniques in Israel, a world leader in the field. The firm has permission to use part of the army base but it has no other connections with the government or the military. "The bodyguard market in China is huge, but no one is serving it," Chen said. "Lots of Chinese businesspeople have been injured abroad, but it shouldn't be a problem for our company to protect them." The three-week basic bodyguard course costs 28,600 yuan (US$4,600), and those who pass are flown to Israel for advanced weapons training, Chen said. The school is known for its tough regime, sometimes carried out in snowy fields or the strength-sapping heat of tropical beaches. "The situations our bodyguards could face in Israel, or Libya, will be more harsh than they can imagine, so they need to experience that harshness during training," Chen said. Wang Wenwen, 22, one of several women training at the academy, has no doubts about her choice of profession. "The training is a torture, but I can still take it," she said. "Women have certain advantages... your opponent will overlook you, and you can grab a pen from a desk and stab it here," she said, pointing at her neck. "It has a high rate of success." GSA declined to specify how many bodyguards it had trained, but said it had sent personnel to the US, Europe and South America, and the school's graduates can also be recruited by other firms looking to protect Chinese interests overseas. |
| Official suspended after student son given a job Posted: 22 Jan 2013 08:15 AM PST A FINANCE official in Hubei Province has been suspended after he managed to get a government job for his university-going son, who never reported to work. If that was not enough, the youngster even managed to get promoted while pocketing the monthly salary as well. Luo Shiqun, vice director of Xiangzhou District Finance Bureau in Xiangyang City, is now charged with abuse of power, while his son, Luo Qinyang, has been dismissed. The young Luo landed the job when he just graduated from high school and was preparing to attend university. He was first enrolled in the non-tax income bureau, affiliated to the finance bureau, where he was eventually promoted. And all this, while he was still a student at the university. The payroll records showed that he was paid a monthly 1,410 yuan (US$226.7) in 2011 and 2,191 yuan in 2012. Xiangzhou's discipline and supervision bureau confirmed the case, according to the People's Daily website. Initial investigation found that Luo Qinyang took part in the national college entrance exams in June 2009 and went to the university three months later. But he was recruited for the job as early as July. |
| Posted: 22 Jan 2013 08:15 AM PST A SURVEY by a matrimonial website has sparked online debate about who should control the finances at home, with a good majority of women insisting that men should "hand in" their salaries after marriage. Baihe.com interviewed over 50,000 youngsters, mainly those born after 1980. It found that about 53.2 percent of women want men to give them their salary cards to run the house with only 17.9 percent men agreeing with that. On the other hand, nearly 30 percent of male respondents said they needed the economic freedom at home and would not hand over their monthly pay. The survey also revealed that about 34.3 percent of women - as against 25.6 percent men - were willing to stash away some money for their personal use. Not surprisingly, nearly 80 percent women said they wanted their husbands to be earning double than them. About 18 percent wished that figure to be three times more. Also, many didn't want their partners to work in the entertainment business. Freelancers, flight attendants and tour guides were other fields of work that had few supporters. Weibo.com was abuzz after the release of the survey. "I think husbands should volunteer to hand in their salary cards so they don't spend it unwisely or support mistresses," said a netizen named Nancy. Another said it was impossible for him to live with only 500 yuan as monthly expenses. "So they want their husbands to earn three times more than them and give them all the money? No wonder many of them are still single," wrote a netizen named Zhen Qiang. |
| China’s Richest Man Signs Manchester United Sponsor Deal Posted: 22 Jan 2013 09:00 AM PST
Hangzhou Wahaha Group Co., the beverage maker owned by China's richest man, signed a sponsorship deal with 19-time English soccer champion Manchester United Plc to draw sports fans to its energy drink. The club separately announced a three-year sponsorship agreement with China Construction Bank Corp. (939) yesterday, giving the nation's second-largest lender sole rights to issue Manchester United-branded credit cards in the country. Manchester United, with its lineup that includes Wayne Rooney and Robin Van Persie, estimates that it has 108 million followers in China, where it's played 11 times since 1975 and where soccer is the most-played sport. The club, nicknamed "The Red Devils," estimated in 2011 that 190 million of its 330 million fans were in Asia. Closely-held Wahaha, which is more than 80 percent owned by 67-year-old billionaire Zong Qinghou, sells bottled water, fruit juices and tea. He has a net worth of $16.6 billion, according to the Bloomberg Billionaires Index. "The announcement of partnering with Manchester United represents a perfect opening paragraph in the next chapter of our history," Zong said in the statement. Sports Sponsorship The agreement was signed yesterday in the eastern Chinese city of Hangzhou, where Wahaha is based, with former Manchester United player Andy Cole present. It is the beverage company's first pact with an international sports team. Wahaha will run marketing promotions including three-on- three soccer competitions, which offer winners the chance to train at Manchester's training academy, it said. "Wahaha is one of the most iconic brands in China and one that has come to symbolize the dynamism and strength of the modern Chinese economy," Richard Arnold, Manchester United's commercial director, said in the release. |
| Deal Gone Wrong Adds to Caterpillar’s Troubles in China Posted: 22 Jan 2013 09:06 AM PST
Caterpillar Inc. believed acquiring China's Zhengzhou Siwei was a way for the U.S. company to boost its fortunes in a lucrative but challenging market. Siwei, which sells mine-safety equipment, also boasted an American pedigree. Its controlling shareholders were James E. Thompson III, the scion of one of Asia's most successful expatriate families, and Emory Williams, a former head of the American Chamber of Commerce in China. Caterpillar paid about $700 million in June for Siwei's parent, ERA Mining Machinery Ltd. But now, the purchase has dealt a blow to Caterpillar's already lackluster performance in China. The Peoria, Ill., construction-machinery maker on Friday said it would write down ERA's value by $580 million, blaming "deliberate, multiyear, coordinated accounting misconduct" that was designed to overstate profit at the unit before the deal. The accounting surprise contributed to the departure of a senior Caterpillar executive, a person familiar with the matter said. The full nature of the accounting issues remain unclear beyond Caterpillar's statement that it discovered discrepancies between ERA's actual and recorded inventories, which would lead to a broader look at its accounting practices. Caterpillar also said it found improper revenue-recognition practices that were "early and at times unsupported." The company said it is "considering all of its options to recover its losses." Messrs. Thompson and Williams didn't respond to requests for comment. Together they controlled just under half of ERA's shares when Caterpillar bought it, with Mr. Thompson owning about two-thirds of the block, according to securities filings. Former Caterpillar employees and industry insiders say the company has struggled to establish its place in the rough-and-tumble China market, where an emphasis on low prices and political connections outweigh Caterpillar's strength as a maker of premium equipment. China accounts for roughly half of the world's demand for construction machinery, and Caterpillar executives have said that unless the company can "win" in China, it risks losing its crown as the industry's biggest player world-wide. Beyond the blow from ERA, Caterpillar's China operation faces an industrywide construction slump and the rise of domestic rivals that are gaining market share. "If you don't do something in China as a multinational to constrain the growth of your Chinese competitors, they will emerge as threats," says Stephen Dyer, a partner with management-consulting firm A.T. Kearney. Foreign companies "don't necessarily have cheap and so-called good-enough products for the market." Caterpillar defends its plans for China and says the company still sees promise in Siwei's business. "Our strategy to expand our coal-mining business in China is unchanged, and we are optimistic about the underground coal-mining-equipment opportunities," Caterpillar says. It also attempted to fill the low-price niche in 2008 by purchasing Shandong Engineering Machinery Co. for an undisclosed amount. Caterpillar says it will take the ERA charge in the fourth quarter and that it doesn't expect the matter to affect Caterpillar's results for this year. The $580 million write-down is small compared with Caterpillar's market capitalization of $63 billion. Caterpillar announced the charge after the close of regular trading Friday and the company's shares fell 1.5% after hours. The U.S. stock market was closed Monday. The problem comes as Caterpillar and other international rivals face increasingly tough competition from within China. Fast-growing machinery makers such as Sany Heavy Industry Co. and Zoomlion Heavy Industry Science & Technology Co. have won market presence through assertive sales staff and aggressive pricing and financing terms. Critics say some Chinese equipment makers take advantage of weak accounting procedures and strong government backing to operate at what Western companies would consider a loss. In 2007, when China sales accounted for 2.5% of Caterpillar's $41.5 billion in global revenue, the company announced a goal to triple its Chinese sales by 2010. But despite investing in 23 factories in China, Caterpillar early last year said the country accounted for only 3% of the company's sales, which were $60.1 billion in 2011. Japanese rival Komatsu Ltd. gets about 8% of its sales from China. Chinese companies' roots and domestic sales staff give them advantages when dealing with China's diffuse state-owned construction and mining companies, people in the industry say. David Beatenbough, an American executive at construction-equipment maker Guangxi LiuGong Machinery Co., says he expects LiuGong's 100 or so dealers to establish their roughly 600 outlets near customers, who sometimes pay in cash. "We believe in a strong customer relationship, and we have to have dealers who are closer to the customers," he said. In contrast, Caterpillar's network is run by just four authorized China dealers, all of them units of other multinational companies. Caterpillar says its "business model, which includes what we believe is the strongest dealer network in our industry, is what has positioned Caterpillar as the global leader in our industry." Its dealers are expected to have deep pockets for financing and to provide Caterpillar-approved repairs. Siwei traces its roots to China's bloated state-owned corporate sector. The company's business, making hydraulic supports for mine roofs, offers smaller profit margins and a lower profile than Caterpillar's big machines. It also can be a tough business for generating cash, says Stephen De Pretre, a managing director for consulting firm Sapphire Group Asia. Siwei "has a long collection period," says Mr. De Pretre, who is based in Beijing. "You have to fund everything. You have to wait six to 12 months to see your money." But Siwei has strong connections with local mine operators, offering a built-in customer base and potential distribution for other products. A 2010 filing with the Hong Kong Stock Exchange filing said Siwei had 9% of the market. Milwaukee-based mining-equipment maker Bucyrus International Inc. had expressed interest in acquiring Siwei, before Bucyrus was acquired by Caterpillar in 2010, according to two people familiar with the situation. "If they had bought it five or six years ago, it would have been a fraction of the price," Mr. De Pretre says. The company that eventually became Siwei was assembled from other operations by Li Rubo, a Chinese citizen who lives in Beijing. A person who has met Mr. Li describes him as well-connected with local governments and mines. Mr. Li, who also uses the English name John Li, couldn't be reached for comment. Mr. Li in 1997 met Mr. Williams, an American businessman with a background in construction-material supplies, and the two become friends. Mr. Williams has a well-known name in business circles; his father, also named Emory Williams, had been a chief financial officer of what is now Sears Holdings Corp. The younger Mr. Williams, whose wife is Chinese, was chairman of the American Chamber of Commerce in China in 2005 and 2006. Mr. Williams and his family in 2007 invested in about a quarter of Siwei and he took a major decision-making role. Siwei soon began to post strong profit growth, with earnings reaching 124.9 million yuan ($20.1 million) in 2009, more than six times its profit in 2007. Revenue over the period roughly doubled to 1.236 billion yuan. In a complicated transaction known as a reverse takeover, Siwei's operations became publicly traded in Hong Kong in 2010. The resulting company, which initially was called ERA Holdings Global Ltd., gained a new top investor in Mr. Thompson. Mr. Thompson, who was Mr. Li's son-in-law, bought the shares of Mr. Li and other Chinese shareholders for $38.5 million, according to securities filings. Mr. Thompson is the son of James E. Thompson, the founder a Hong Kong-based moving company called Crown Worldwide Group and a fixture in Hong Kong's civic life. |
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