Sunday, December 13, 2009

Heartfelt welcome for Crown Prince Sultan

hazanfar Ali Khan | Arab News

Crown Prince Sultan

RIYADH: Second Deputy Premier and Minister of Interior Prince Naif said on Thursday the return of Crown Prince Sultan, deputy premier and minister of defense and aviation, to Riyadh after full recovery from a prolonged illness would be the happiest moment for the Kingdom and its people. The crown prince is due to arrive in Riyadh today.

Prince Sultan was convalescing in the Moroccan city of Agadir after undergoing surgery at a New York hospital in February. Despite his illness, the crown prince was keeping himself abreast with the news and developments in the Kingdom, while closely following up on the affairs of the homeland, Prince Naif said.

“I am very proud to say that Prince Sultan is the right-hand man of Custodian of the Two Holy Mosques King Abdullah. During their era Saudi Arabia has made and will continue to make great achievements,” Prince Naif told Saudi Arabian Television. “Saudi Arabia, God willing, will remain a strong, respectable and generous country.”

He praised the initiatives taken by some Saudis to carry out charitable projects to mark Prince Sultan’s return, saying such activities would benefit the poor and the needy. The capital city wore a festive look on Thursday with thousands of Saudi flags, banners, placards, billboards and life-size photographs of Saudi leaders decorating its main roads, streets and squares.

Prince Mishaal, chairman of the Allegiance Commission, and senior officials expressed their happiness that the crown prince is returning today.

“The whole nation celebrates the return of Crown Prince Sultan,” said Prince Muhammad bin Fahd, governor of the Eastern Province in a statement. Prince Sultan bin Salman, chairman of the Disabled Children’s Associ-ation, congratulated King Abdullah and the nation on the crown prince’s return.

“Prince Sultan is a symbol of goodness and achievements,” he said and praised the crown prince’s support for charitable and humanitarian projects.

Abdullah Omar Naseef, secretary-general of the International Islamic Council for Dawa and Relief, said: “I am glad that I will see the smiling face of the crown prince again, who is known for his benevolence, visionary leadership, humanism and philanthropy and has brought smiles to the faces of millions of poor and needy.

“All Saudis and residents have a reason to be happy and grateful to Prince Sultan for his charity works, his generous donations for noble causes and support for the poor.”

“We are overjoyed by the news of the arrival of this great and visionary benefactor,” said Shoura Council member Hamza Khoshain.

Khoshain added: “Crown Prince Sultan and his charitable works have touched the hearts of millions of people not only in Saudi Arabia but also in different parts of the world.”

The crown prince made the first donation to Prince Salman Charitable Housing Society on Wednesday, which marked the inauguration of a donation campaign for the society.

The donation ceremony at his Agadir palace was attended by Riyadh Gov. Prince Salman, who is the society’s president; and Prince Mohammed bin Salman, vice president and chairman of the society’s executive committee.

The mobile donation service aims to facilitate contribution to the society by sending a blank message to the number 5040 for donating a sum of SR12.

So far as the life and achievements of Crown Prince Sultan are concerned, they have made indelible prints on one and all.

Sultan received his early education in religion, culture and diplomacy along with his brothers at the Royal Court.

He was appointed governor of Riyadh in 1947 before becoming the minister of agriculture in 1953 and minister of communications in 1955.

King Faisal appointed him minister of defense and aviation way back in 1962. He then presided over the development of Saudi armed forces, providing the Kingdom with a modern, well-equipped defense capability.

In 1982, King Fahd appointed him as second deputy prime minister, while on Aug. 1, 2005 he was appointed the crown prince and deputy premier by King Abdullah. — With input from P.K. Abdul Ghafour

Choosing the call for prayers

Adil Salahi

A NUMBER of scholars are of the view that prayer was made obligatory to Muslims in the first instance as night worship. This is confirmed in the opening verses of Surah 71, which may be translated as follows: “You enfolded one! Stand in prayer at night, all but a small part of it, half of it, or a little less, or add to it. Recite the Qur’an calmly and distinctly. We shall bestow on you a weighty message.” (73: 1-5) This order was relaxed a year later after the Prophet (peace be upon him) and his companions went through an exacting task that required them to spend several hours each night in prayer. It was then made obligatory twice a day, one in the morning and one at night, each consisting of two rak’ahs. Muslims used to offer these prayers in secret, and no call was made out to them to attend prayers. In year 10 of the start of Islamic revelations, when the Prophet took his night journey from Makkah to Jerusalem and then ascended to heaven, prayer was made obligatory five times a day.

Three years later, when the Prophet immigrated to Madinah where the Muslim community had a settled, solid base and established their state, the need was felt for some form of announcement to call people to come and attend the congregational prayers. The Prophet consulted his companions on the matter and different views were expressed. A Hadith narrated by Abdullah ibn Umar gives a short version of this consultation. He says: “When Muslims settled in Madinah they were on the watch out for prayer times. No call was made for them to gather. They discussed the matter one day. Some of them suggested to have a bell like the one used by Christians, while others suggested a horn like that used by the Jews. Umar said: ‘How about choosing a man to make call when prayers are due.’ The Prophet asked Bilal to make the call.” (Related by Al-Bukhari).

Other Hadiths give more details of the discussion and the suggestions made. Apparently, the first suggestion was to raise a banner, but this seemed unpractical, because it could not be seen at night. Moreover, people needed to look out for it. Another suggestion was to lit up a fire, but the Prophet said that such was the form used by Magians. He did not like the idea of copying their practice. He made the same objection when a horn was suggested, because he did not feel it proper to imitate the Jews when a large Jewish community was living in Madinah. However, he did not object when a bell, like that used by Christians, was suggested. In fact, he ordered that a bell be made. It was then that Umar made his suggestion for a vocal call to prayer. The Prophet liked the idea and told Bilal to make the call. He went out and shouted that prayer was due.

Abdullah ibn Zayd reports: “I went home that night thinking hard about the matter, particularly because the Prophet was not very happy with the outcome. When I went to bed, I was still not fast asleep when I saw in a dream a man carrying a bell. I asked him whether he was willing to sell me the bell. He said: ‘What do you need it for?’ I said: ‘We will use it to call people to come to prayer.’ He said: ‘Shall I point out to you something better than this?’ When I asked him what was that, he taught me the words of the athan (i.e. the Islamic call to prayer).” These are: “God is supreme (4 times). I bear witness that there is no deity other than God (twice). I bear witness that Muhammad is God’s messenger (twice). Come to prayer (twice). Come to what ensures success (twice). God is supreme (twice). There is no deity other than God.”

In the morning, Abdullah ibn Zayd went to the Prophet and mentioned what he saw in his dream. It was revealed to the Prophet that the call should be verbal. Therefore, he told Abdullah that his dream was true. He further said to him: “Go out with Bilal and teach him these words to make the call. His is a melodious voice.” Bilal made the call. When Umar heard him, he came hurriedly to the Prophet and said: “By Him who sent you with the message of the truth, I saw the same dream.”

Key issues to be discussed at GCC summit in Kuwait

Ghazanfar Ali Khan | Arab News

RIYADH: Custodian of the Two Holy Mosques King Abdullah is to lead the Kingdom’s delegation to the summit of the six-nation Gulf Cooperation Council (GCC), which is scheduled to start in Kuwait today.

Foreign Minister Prince Saud Al-Faisal, who arrived in Kuwait on Sunday with Finance Minister Ibrahim Al-Assaf, attended a ministerial meeting with his Gulf counterparts to give final touches to the GCC summit agenda, discuss draft decisions and talk about the main points of a joint statement to be released later by the Gulf leaders.

“The summit will start on Monday evening and I expect that the heads of Gulf states would start arriving in Kuwait around midday,” said Ahmed Al-Kabi, a spokesman of the GCC General Secretariat, via telephone from Kuwait.

Asked about the agenda, Al-Kabi said he was not aware of the specifics so far. However, major political and commercial issues, including Iran’s nuclear standoff, terrorism, the Middle East peace process, the Saudi position on intruders, a common currency and ways of further strengthening ties among member states of the GCC are likely to be discussed at the two-day summit.

“In fact, the GCC summit will discuss the whole range of regional and international issues including Iran’s nuclear program and Saudi defense of the Saudi-Yemen border,” said a report obtained by Arab News here on Sunday.

The summit coincides with the call given by Yemeni Foreign Minister Abu Bakr Al-Qurbi on Sunday, asking Tehran to crack down on Iranian groups he accused of aiding Houthi rebels in northern Yemen, said the report.

The GCC leaders will, as a result, address the situation in Yemen politically and evaluate GCC-funded developmental programs. The summit will also assert the firm stance toward supporting Yemen’s security and assure Sanaa about continuous support for development from the Gulf bloc, said Abdul Rahman Al-Attiyah, in a statement, on Sunday.

It is important to note in this context that the GCC summit coincides with Al-Qurbi’s visit, who is in Kuwait carrying a letter of Yemeni President Ali Abdullah Saleh to Kuwait’s president and other GCC heads. The letter is said to deal with the situation in Yemen.

Also on the agenda will be the role of the Gulf bloc in tackling political challenges like the Middle East peace process, Israeli withdrawal from occupied Arab territories and the eventual establishment of an independent Palestine state. The report said that Dubai’s debt crisis provides the unsettled backdrop to the annual gathering of leaders from the GCC. Gulf leaders are expected to give the green light to a number of multibillion-dollar economic projects but it remains unclear whether they will also step in to ease the woes of debt-ridden Dubai.

The GCC would also officially launch a monetary union pact, likely to approve a multibillion-dollar railway network and commission the start of a common power grid project, said another GCC official on condition of anonymity.

He said that the question of the appointment of a new GCC secretary-general for the 2011-2014 term could also be discussed.

In June this year, Bahrain nominated Mohammad Al-Mutawa, cultural adviser to the Bahraini prime minister, to the post. All Gulf states except Qatar have supported Bahrain’s choice. But Doha is seeking to extend Al-Attiyah’s term to 2014.

Former Italian premier bloodied by attacker

Emilio Parodi | Reuters

This video image made available by RAI TG3 shows Italian Premier Silvio Berlusconi after an attacker hurled a statuette at Berlusconi striking the leader in the face at the end of a rally in Milan, Italy on Sunday. (AP)

MILAN - Italian Prime Minister Silvio Berlusconi was rushed to hospital covered in blood with a broken nose and teeth after a man with mental problems hurled a statuette at him at a rally, officials said on Sunday.

Berlusconi was bundled into a car, with blood spattered over his face, and rushed to hospital after the assault. The media mogul had just ended a speech to thousands of supporters in a square behind the cathedral in the northern city of Milan.

The 73-year-old prime minister said "I'm fine, I'm fine" as he arrived at the hospital, the Ansa news agency said.

His personal doctor, Alberto Zangrillo, said the premier had suffered a fractured nose, two broken teeth and cuts to his lips that required stitches.

He said Berlusconi would be kept in overnight for observation and would need up to 15 days to recover.

"This is truly a bad day for Italy, and it's the duty of all the political forces to ensure that Italy does not go back to the years of violence," said Gianfranco Fini, Berlusconi's top conservative ally, one of many to denounce the incident.

A 42-year-old man who has been under treatment for mental problems for 10 years was detained for throwing a souvenir plaster statuette of the cathedral at Berlusconi from close range, police said.

The incident triggered an outpouring of solidarity for Berlusconi from allies and critics alike, just as the prime minister seeks to regain political momentum after a bruising year battling mounting legal troubles and sex scandals.

The billionaire businessman has portrayed himself as a victim of "communist" magistrates, biased media and jealous lefists.

Berlusconi's spokesman said the premier had confided his fears of a "climate of hate and aggression" against him as they traveled together to the rally.

"What they've done to Berlusconi is an act of terrorism," Umberto Bossi, head of the far-right Northern League and a close Berlusconi ally, told Ansa. "An oppressive climate has been felt for some time and what's happened today is a worrying sign." A number of ministers and supporters gathered at the Milan hospital where Berlusconi was spending the night.

The attack came after a speech that had been billed as politically significant.

Berlusconi launched a familiar tirade against the left and rattled off a list of government achievements, in a characteristically feisty performance aimed at shoring up his standing and ratings, but revealed no shifts in strategy.

After a summer dodging accusations of an improper relationship with a teenager and parties with escorts, Berlusconi has come under pressure lately from a widening rift with Fini and a growing list of legal headaches.

Stripped of immunity from prosecution, Berlusconi faces several trials, including one on charges of bribery and corruption and another on charges of tax fraud. An opinion poll published on Saturday indicated his popularity had fallen four percentage points to just over 50 percent as Italians fretted that his legal entanglements could distract him from government duties.

He denies any wrongdoing and says judicial allegations against him are part of a politically-motivated campaign by biased courts and judges to bring down his government.

In 2004, an Italian bricklayer hurled a camera tripod at Berlusconi, injuring him slightly on the head.

Crown prince, Bahraini king discuss issues

Saudi Press Agency

Crown Prince Sultan, deputy premier and minister of defense and aviation, attends a function organized by Second Deputy Premier and Interior Minister Prince Naif to celebrate his return. (SPA)

RIYADH: Crown Prince Sultan, deputy premier and minister of defense and aviation, received Bahrain’s King Hamad bin Isa Al-Khalifa at Aziziah Palace in Riyadh on Sunday.

The Bahraini king, who arrived in Riyadh earlier in the day, congratulated Prince Sultan on his return in full health following treatment abroad. During the reception, the two leaders discussed regional, Arab and international developments in addition to ways of strengthening relations between the two countries.

Crown Prince Sultan also attended on Sunday evening a welcome function organized by Second Deputy Premier and Interior Minister Prince Naif to celebrate his return.

King Hamad and Lebanese Prime Minister Saad Hariri were also among the guests who attended the function held at the headquarters of the Sports Lounge of the Prince Faisal bin Fahd Olympic Complex in Riyadh. In his welcome speech on the occasion, Prince Naif said the Kingdom has been experiencing stability, security and economic growth unlike other parts of the world.

Prince Naif mentioned the all- round development achieved by the Kingdom under Custodian of the Two Holy Mosques King Abdullah and Crown Prince Sultan. “It was with the support of King Abdullah and Crown Prince Sultan that the security forces in the Kingdom have defeated attempts to harm the Kingdom by deviants who claimed to be Muslims,” said Prince Naif.

More than 200 terror plans have been foiled by the security forces and deviants have been made to appear before Shariah courts, he added.

Referring to incursions on the Saudi-Yemeni border, Prince Naif said Saudi armed forces would work to defeat any hostile attempts against the Kingdom.

Sultan cites security forces who fought infiltrators

Arab News

Crown Prince Sultan, accompanied by Prince Khaled bin Sultan and other senior officers, visits an injured soldier at the Armed Forces Hospital in Riyadh. (SPA)

RIYADH: Crown Prince Sultan, deputy premier and minister of defense and aviation, began his official duties on Saturday by visiting members of the armed forces who were injured while confronting Yemeni infiltrators.

Speaking to reporters, Prince Sultan, who returned from abroad on Friday following a yearlong medical trip, commended Saudi forces for defending the Kingdom’s southern borders.

On arrival at the Armed Forces Hospital in Riyadh, the crown prince was received by Prince Khaled bin Sultan, assistant minister of defense and aviation for military affairs, Chief of Staff Gen. Saleh Al-Mohayya and Maj. Gen. Kattab Al-Otaibi, director of medical services for the armed forces.

Prince Sultan conveyed the greetings of Custodian of the Two Holy Mosques King Abdullah, the supreme commander of the armed forces, to injured soldiers and wished them a quick recovery. “I am proud of the bravery displayed by our armed forces personnel while doing their duty in defending the Kingdom and its people,” Prince Sultan said.

The royal visit, Prince Sultan’s first official activity after returning from abroad, reflects his deep concern for members of the armed forces who sacrificed their lives for the Kingdom.

The injured officers expressed their gratitude to Prince Sultan for visiting them in hospital and showing concern for their welfare. They also thanked God for Prince Sultan’s return.

Meanwhile, Saudi armed forces continued their operations in the mountainous areas along the Kingdom’s southern border with Yemen to flush out infiltrators. The armed forces are using unmanned planes to comb areas where the enemy is hiding.

According to a report carried by Al-Watan Arabic daily on Sunday, six more Saudi soldiers recently died fighting Yemeni infiltrators. They are Ali bin Qassim Al-Amri, Saleh Abdu Al-Marhabi, Ahmed Abdullah Al-Shutairy, Jaber bin Yahya Al-Malki, Muhammad Al-Farisy and Abdullah Al-Saan. The men were buried following funeral prayers. Qassim Al-Amri, father of Ali Al-Amri and a retired military officer, said: “My family and I are proud that our son died as a martyr fighting the enemy and defending the Kingdom.”

A large number of people attended Al-Amri’s funeral, which was held in Khamis Mushayt.

The Way of the Vegetarian


The old Chinese saying goes: “Food is the most valuable thing under heaven.” Thirty years after reform and opening up to the outside world, the Chinese people don’t worry about having enough food on the table, but they are more concerned about eating healthily.

Heart of Healt

“In the past, it was hard for us to have meat on the dinner table all year round. Today, we can eat meat every day, but it turns out that’s not such a good thing. I was diagnosed with diabetes. My doctor told me I ate too much sugar and oil,” says Wang Wenbin, 66. “Living all these years, I did not know there was so much knowledge about eating.”

In China, Mr. Wang is not alone. Rapid economic development has enriched the menu of Chinese people. But it has also triggered the pervasion of “rich people’s diseases” like high blood pressure, obesity and diabetes. Even worse news is that the average age of the afflicted is decreasing. And in the fast food restaurants obese kids are commonly seen shoveling down the fatty stuff. “Now that families have higher earnings, parents would like their children to eat better,” explains Ji Chengye, a professor with the Institute of Child and Adolescent Health, Peking University. “The occurrence of ‘rich people’s diseases’ at a younger age is associated with an unhealthy diet.”

“Every year, China losses billions of yuan due to the negative impact on health resulting from unsound diets,” noted Hans Troedsson, Representative of the World Health Organization (WHO) in China. According to Troedsson, if China intends to maintain a sustained rapid development, it needs a healthy population. A reasonable diet and regular exercise are the lowest cost and most effective ways to maintain good health.

Global studies reveal that when per-capita GDP rises to between $1,000 and $3,000, people tend to drastically alter their diet, and many nutrition-related diseases tend to begin threatening their health. This is the time when government should step in. China is currently at this stage. Governments in more than 20 countries have published food-based dietary guidelines. The earliest was published by Sweden in 1968, and played an active role in the overall improvement of health. WHO and the World Food and Agriculture Organization of the United Nations advised that other countries should follow the example of Sweden. Under the auspice of China’s Ministry of Health, Dietary Guidelines for Chinese Residents (2007) compiled by a panel of food and nutrition experts, was published in early 2008.

“Books, television and newspapers keep telling us what a healthy diet is,” says Vincent Liu, a civil servant. “I don’t have enough time during the day to enjoy my meals, so, concerned about malnutrition, I used to stuff myself with a big supper. Thanks to the guidance, I know too much intake at night will lead to fat accumulation. And I had thought meat is most nutritious food. Now I know I should eat more vegetables, fruits and bean products to have a balanced diet. So now I eat a light meal for supper.”

In Fashion

A vegetarian diet, once mostly associated with Buddhism, has become a fashion in China. More Chinese people have begun to follow a vegetarian diet. Those who go on a vegetarian diet do so for different reasons, like for body building and simple self-respect. Guan Jianfeng, with a Beijing-based real estate company, is among them. “My motivation is simple. To keep fit. Human beings eat animals. And most animals are fed by plants. It proves that plants can provide enough nutrition for us. I just bypass the middle process. If a vegetarian diet can help me be healthy and slim, why not?”

Mao Xinrui, a recording director, has a deeper understanding of the vegetarian diet. “I once was an eat-everything type of guy, an absolute predator. No matter if it was flying in the sky or running on the ground, if edible, I would eat it. Until the day our company went on a countryside tour. We ordered a roasted whole lamb for dinner at a family hotel. We could choose the live lamb ourselves. I undertook that responsibility. I went to the pen with the proprietor. As soon as he got close to the pen, the animals seemed to know what was going on and began bleating. The one finally chosen bleated even more loudly, like a crying baby. I even saw tears in its eyes. It was too much for me. Since then, I quit eating meat. All life is equal. And respect for other life is a form of self respect for us human beings.”

In addition to the humanitarian aspect, some vegetarians have more global reasons for their no-meat diet: to protect the environment and decrease world hunger. Zhou Yongshan, a young teacher from Taiwan, is busy giving lectures on healthy diets around China. “The amount of carbon dioxide emitted by an ox each year is equal to that emitted by a car,” he says. The great demand of feed for animal husbandry on a large scale causes a shortage of cultivated land which can lead to deforestation. More land means more water used to irrigate. Overgrazing brings about grassland desertification. Sandstorms have become increasingly serious in recent years, and this has sounded alarm bells. Maintaining a vegetarian diet is an effective way to solve these problems, Zhou believes.

Answering the rising demand for meat-free dining, vegetarian restaurants have sprung up in recent days. “I opened Lotus in Moonlight, my first vegetarian restaurant, in 2001. Catering to more vegetarian patrons, I opened my second branch in 2006. We also provide some meat-like selections for customers,” says Xia Zehong, a vegetarian who is committed to promoting the concept of a meatless diet. Her vegetarian restaurants boast elegant ambience and light Buddhist music. “I often come to this vegetarian restaurant because I can find peace here and temporarily escape from the bustling city,” noted a customer.

Thousands of years ago, Chinese people understood the importance of food to health. And vegetables were always the major part of their diet. Experts believe the vegetarian trend is a positive return to that traditional way of eating.

Fiscal Focus:


◆Text by Yan Ying
Addressing the current global financial crisis, Dr. Justin Yifu Lin, Senior Vice President and Chief Economist of the World Bank, Former Director of China Center for Economic Research of Peking University.
Dr. Justin Yifu Lin delivers the keynote address at the International Summit Forum in Honor of the 30th Anniversary of China’s Reform and Opening-Up.
Railway investment drives domestic demand. In China today, 150 major railway projects are underway, at a total investment of more than one trillion yuan. Pictured is the newly-joined Wuhan Tianxingzhou Yangtze River Bridge.
Dr. Lin talks with Professor Peter Drysdale from Australian National University.
Dr. Lin confers with economists from several nations.
A happy moment, with his grandson.

In October, at the founding ceremony of the National School of Development of Peking University and the International Summit Forum in Honor of the 30th Anniversary of China’s Reform and Opening-Up, Dr. Yifu Lin sat for an interview with China Pictorial. The core subjects addressed were the current global financial crisis and the market reforms at play in China over the past three decades.

According to Lin’s forecast, next year China’s economic growth should range between 8 and 9 percent, and China’s ongoing rapid economic development will substantially contribute to the international effort to remedy current financial ailments.

China Pictorial: The financial crisis is now sweeping across the globe and some scholars have warned that China should not to be excessively open. What are your thoughts as to the relationship between economic opening and security?

Dr. Lin: There is an old Chinese saying that goes: “Never stop eating for fear of choking.” If a country’s problem affects other nations, this is a cost of globalization. But globalization ensures a more complex and specialized international division of labor, and enables all nations to better exploit their respective relative advantages, effectively allocate resources, increase technological exchange, and reduce the costs of industrial upgrades and technological upgrading. So, generally speaking, globalization is more beneficial than detrimental. We must view this phenomenon in just such a way. Wouldn’t it be worse if China had not implemented the policy of reform and opening-up, and still remained a planned economy?

Before the reform, China’s import and export volume accounted for 9.5 percent of the GDP, and without the influx of foreign capital, China was not exposed to any impact from foreign countries. However, back then, the per-capita annual disposable income of the Chinese people was less than $150. Today, thanks to globalization, the import and export volume accounts for 70 percent of the GDP, and the influx of foreign capital has increased. Although this financial crisis to some degree impacts China’s economy, represented by a decrease in export and a slump in stock and real estate markets, our urban per capita disposable income has reached $2,000. Therefore, we should stay the course of globalization.

Of course, there are still some experiences and lessons to be considered. In the process of globalization, we can offer varying preferential policies to direct foreign investment, but we should maintain control over short-term capital flow. To cope with the ongoing financial crisis, China has three lines of defense. Firstly, China holds high foreign exchange reserves; secondly, our capital account is not open, so there will not be phenomenon of capital flight; and thirdly, our fiscal situation remains good, and if export drops, we can shift to expand domestic demand.

China Pictorial: The U.S. subprime lending crisis triggered a global re-evaluation of the free market economic system. In considering the implications of this financial crisis, do you see any problem with the free market system? Do you think China’s market reforms should pause or cease altogether? In the process of economic development, how do we balance the relationship between the market and government?

Dr. Lin: The market and government are equally important. It is not rational to merely emphasize government functions and simply rely on planned orders. On the other hand, informational asymmetry is commonplace in a market economy, especially in finance, and a lack of supervision would result in moral risks. Then, who is in charge of the supervision? That is the government. So, this issue should be considered from a balanced, rational angle. If market works, then leave market to do it; otherwise, the responsibility should go to the government. In fact, this financial crisis is not just a failure of market, but also a failure of the government. While we work to keep improving the market, government also needs improvement.

China Pictorial: What do you foresee for global economic trends after this financial crisis?Dr. Lin: The survival of financial institutions depends on faith. People are not clear about the risk of bad derivative products, so would immediately become alert when crisis occurs to a few financial institutions. Then, the capital flow of financial institutions will be stagnated. The bankruptcy of one bank may lead to a close of more banks. With people’s confidence gone, banks had to prepare for depositors to withdraw cash at any time. They would be hesitant to lend loans, and investment will drop accordingly.

The burst of the real estate bubble wore away people’s confidence in economy, resulting in sluggish of stock market and shrinkage in consumption. In such a situation, developed countries will inevitably enter an economic winter, and this has been widely acknowledged by private agencies and government institutions. Some scholars forecast a zero or even minus economic growth in 2009 for the U.S., Japan, and European developed nations.

China Pictorial: In your role as the World Bank Chief Economist, what do you see as the core issue in this financial crisis?

Dr. Lin: The current financial crisis is the most serious since 1929. While most of the media and scholars are mainly focused on U.S. and European developed countries, I focus on the object of service of the World Bank — developing countries. The World Bank is an international organization, mainly committed to assisting developing countries in economic development and poverty relief.

China Pictorial: In what fundamental ways do you foresee this crisis impacting developing countries?

Dr. Lin: If the developed countries enter a period of economic depression, developing countries will see a decrease in export and investment. When the financial crisis comes, direct foreign investment will drop, and to survive and prepare for possible future needs, the financial institutions of developed countries will increase their capital adequacy ratio. In this case, the money previously put in developing countries will probably efflux back to developed countries.

As prices for oil and mineral resources fall, resource-based developing countries will see less business and less investment. And the economic depression in developed countries will result in a less demand for labor, and this will reduce the income from labor export of developing countries.

The economic rise of developing countries in the previous decades was largely driven by investment, and now that the foreign investment decreases, the financing chains of many under-construction projects are cut off, and their bank loans will become bad debts; and for those completed projects, because of a decrease in market demand, the products will be hardly sold out, and such a situation will also induce bank crisis.

The economic slowdown and bank crisis will certainly lead to the fading of people’s confidence and a big drop in the stock market. Under such a circumstance, developing countries, especially those countries with less foreign exchange reserves and relying on considerable foreign funds to cover the deficit in current account, what lies ahead may not be simply a slow-down economic growth, but financial crisis, and even the so-called “payment crisis.”

China Pictorial: What can developing countries do to effectively contend with this crisis?

Dr. Lin: The first thing is to prevent financial collapse. Governments should adopt decisive, timely measures to avoid panic withdrawal of deposit and the bankruptcy of banking firms.

And government should try all means to keep the economic growth rate at a comparably high level. Prior to the first half of this year, the prices for petroleum, raw materials, and grain soared, and the primary crisis faced by the world was inflation; thus inflation prevention was the main target of macro economic policy. But now that the prices for petroleum, mineral resources, and grain have dropped, inflation pressure has eased; and facing a probably sluggish economy, the government should adopt loose monetary policies as follows:

Firstly, cut interest rates, reduce deposit reserve rate, increase loanable funds of banks, and support investment in enterprises, especially those sectors with relative advantages and industrial upgrading, so as to drive economic growth with investment.

Secondly, adopt effective fiscal policies. If a nation previously maintained a positive financial situation, it will enjoy a broader functional space of fiscal policies. Developing countries generally have an inadequacy in infrastructural facilities, and after a period of high-speed economic growth, many of the countries are faced with bottlenecks in power and transportation. Since the global economy is now slowing down, those countries can use this time to reinforce their infrastructures. They can also make investment in such departments as social security, education, medical care, and insurance, so as to pave the way for future economic development.

In monetary policies and fiscal policies, developing countries should conduct counter-cycle intervention, so that an economic soft landing can be realized. In case crisis happens in a developing country, the low-income tribe will be disastrously affected. Therefore, we must work to avoid the financial crisis of developed countries to be evolved into a crisis to the subsistence and development of developing countries.

China Pictorial: What should China do?

Dr. Lin: I think the most important thing China should do in this crisis is to maintain its strong financial growth. Some suggest that China should withdraw its foreign exchange reserve of $2 trillion to save the market. But rather than in cash, these $2 trillion are mostly in U.S. treasury bonds. A cash-out at this time would likely trigger another crisis.

We hope that the impact of this financial tsunami will soon be past. Generally speaking, China’s economic development trends are good; the macro situation is good; and varying external accounts are good. So I believe China is capable of weathering this storm and maintaining strong growth.

China has a prescription for financial crisis, and that is stimulating domestic demand. The room for expanding Chinese domestic demand is great, including increasing investment in infrastructure construction, increasing expenditures in public undertakings, like medical care and social security and, more importantly, improving the development environment in rural areas and increasing farmers’ income.

In 2009, consumption expenditure and investment in fixed assets will continue to be the main force driving China’s economic growth. Compared to the two-digit number over the past several years, next year’s growth rate may be readjusted by a margin of 2 to 3 percent to range between 8 and 9 percent. But, China will remain a fast-growing economy and China’s fast economic development will be the largest contribution the nation makes to the global efforts in tackling this financial crisis.

The Opportunity of Crisis, An Exclusive Interview with CNTAC Vice President Wang Tiankai

text by Tan Xingyu and Zhao Fei

CNTAC Vice President Wang Tiankai.   by Wang Lei

Textile businessmen contend with lessened customer counts at a foreign-trade apparel fair. CFP

Expansive textile operations, like pictured, must adapt to a changing market, according to Wang Tiankai. CFP

Wang Tiankai (left) attending an apparel expo.
The global financial downturn is heavily impacting nations across the economic spectrum. In China, where manufacturing is a primary driver of the fiscal engine, the potential bottom-line impact is gradually becoming better understood.

According to many Chinese econo-mists, while the US was suddenly and seriously wounded in the onset of the crisis, in China the negative scenario is unfolding more slowly, allowing government and industry to evolve a more effective long-term market strategy.

The Chinese government has adopted a series of measures, including the Ten Industries Revitalization Plan, put in motion earlier this year. The textile sector, substantially addressed in the plan, is a major element of the overall national equation, and the challenges facing the industry are a central focus of attention. To better understand what is a complex and important issue, we visited Wang Tiankai, vice president of China National Textile and Apparel Council (CNTAC).

China Pictorial: What do you see as being the overall impact of the financial crisis on the textile industry in China? Is it true that many enterprises in the sector have ceased production, or are on the verge of bankruptcy?

Wang Tiankai: Even before the crisis, the industry already felt pressure from the appreciation of the Renminbi (yuan), the cut of export rebates, the rising cost of production materials, and other factors.

The appreciation of the Renminbi, cut of export rebates and the rising price of raw materials have reduced profit margins, but as long as there is a market, enterprises will manage to survive with more efficient management. But the problem is that the crisis has cut market demand, and this cannot be remedied by the industry itself.

At the end of last year, we conducted a survey, and many of the entrepreneurs responding agreed that the financial crisis had a great or relatively great impact on their enterprises.

In February, we organized an investigatory 100-member task force to conduct research into 145 industrial groups based in 18 provinces, municipalities and regions. 80 percent of the groups remain operating after the Spring Festival. Among these, more than half are operating at 90 percent of their capacity and 10 percent are operating at half of their capacity. After the Spring Festival, more than 80 percent of migrant workers returned to work. That situation was not as serious as it was described by some in the media. I should say that the overall situation in trade has remained stable since the beginning of 2009.

CP: So, you believe that the current challenges facing the textile industry are not as serious as many thought?

WTK: During our investigations we found that two issues loom large. One is a lack of orders; and the second is a reduction in profits. For instance, typically in mid-February they may have already received May and June orders, but now they only have orders for March and April. In one sense this reflects that the market demand is deficient, and in the other sense it reveals that enterprises are not so confident – that they are more cautious in their operations. At the same time, some high-end commodity manufactures are transitioning to middle and lower range product markets. This may make the existing competition in the market more competitive.

To address the problem, the govern-ment has adopted a series of measures, for example, the export rebates and textile industry revitalization policies. With the launch of policies to maintain economic growth and expand the domestic market, demand will gradually stabilize. As to the specific time when it will rebound, that may become clearer in the latter half of this year.

CP: The export rebate rate for six industries is set to be raised on April 1, 2009. The textile and apparel sector, for example, will be raised to 16 percent. In your view, will this move benefit the textile industry across the board?

WTK: I will say the policy will bring substantial benefit to the textile industry, but the export rebate cannot solve all the problems facing the industry. Many enterprises are anticipating more effective measures to support them. In addition to paying a close attention to the comeback of the international market, we expect a stable and sustained expansion of demand in the domestic market. The latter is the key to the overall revitalization of the textile industry in China.

CP: What is your view on trade protectionism?

WTK: The financial crisis stimulates trade protectionism in each country, and this can only make the situation worse. The smooth execution of international economic and trade activities can only be guaranteed on the basis of collectively beneficial cooperation. In respect to this problem, we encourage enterprises to enhance their operation and management while abiding by international standards applying to environmental technology, social obligations, intellectual property rights, and more. At the same time, we also encourage them to transform the adverse situation into a dynamic power for upgrading. On the other hand, unfair trade protectionism will be resolved through negotiations via proper channels, based on international conventions.

CP: What development strategy should the Chinese textile sector undertake?

WTK: Some say that the sector should follow either the road of mass production, or focus on high-end products, but I don’t agree. It is not that simple.

As to mass production, it is true that with an increase in the scale of production, the cost will be reduced. But is there a market large enough to consume the products? Once the market becomes unstable, those enterprises which increased capacity too far will fall victim. As to the high-end strategy, the market has also shrunk.

Now the question turns to who prospers in the market? Obviously, it will be those enterprises which adhere to a diverse strategy. Huafu, a group based in Ningbo City, in Zhejiang Province, plies the market with its unique environmentally-friendly products. During the financial crisis, it actually expanded its investment, instead of cutting production.

I believe that enterprises should evaluate their ability to react quickly in a changing market, and consider that to be an important criterion in judging whether they have become a modern enterprise with core competitive power.

CP: Besides the negative impact, has the crisis also brought opportunity to the textile sector? And, if so, how?

WTK: Before the financial crisis, the textile sector contended with negative issues like a lack of innovation, slow structural adjustment, lagging brand development, and other limiting conditions. Since the enterprises were profitable, regardless, they didn’t sufficiently focus their energy and resources to addressing such ongoing concerns. Now, facing difficulties exacerbated by the financial crisis, they are more focused on finding long-term solutions.

Survival of the fittest is an important principle of the market economy. In this sense, while the financial crisis may mean a period of hard times, it also offers an opportunity for the fittest to positively evolve and advance in the years to come. I believe that after the crisis subsides there will appear many more viable enterprises, and the textile industry in China will look to a prosperous future.

China Perspective —An interview with longtime China observer Dr. Robert Kuhn

◆Text by Liu Haile

Dr. Robert Kuhn during an interview with China Pictorial at his hotel in Beijing. by Liu Rong
























An American investment banker and a longtime China observer, Dr. Robert Lawrence Kuhn became a household name in China as the author of The Man Who Changed China: The Life and Legacy of Jiang Zemin, the 2005 bestseller in China. In offering this unusually intimate and comprehensive personal and political biography, Dr. Kuhn demonstrated that Jiang Zemin’s life personifies the history of contemporary China. Subsequent that work, he traveled around China for four years and interviewed officials at all levels for his new book, How China’s Leaders Think: The Inside Story of China’s 30 Years Reform and What This Means for the Future. The work provides great insight into the China of the past, the present, and what the future holds. On a May afternoon, we visited Dr. Kuhn at his hotel in Beijing.

China Pictorial: Dr. Kuhn, I read The Man Who Changed China, as well as the Chinese-version of your recently published How China’s Leaders Think: The Inside Story of China’s 30 Years Reform and What This Means for the Future. When will the English-version of the latter come out?

Kuhn: Probably this summer. I’m not quite sure because this is much larger and richer. Even though the Chinese version needs to be translated, the speed of Chinese publishing is much faster. The material for the Chinese version is more historically-oriented than of the future. But the English version looks more into the present and future. So, I’ve done additional research since this book came out, which will also be added to the English version. For instance, I visited Guangdong Province to interview Wang Yang [secretary of the provincial Party committee of Guangdong] and Zhu Xiaodan [secretary of the municipal Party committee of Guangzhou].

CP: I notice that you have interviewed a great many people and carried out much research for your new book, and that you also have many other affairs with which you contend. So, Dr. Kuhn, how do you do both so well?

Kuhn: I can tell you that when I write a book, it’s a very different part of my life. Maybe it will take three or four years, but it’s very conceptive. You must maintain great mental focus, consistency and style. Most of the writing I do is at night. The time I often write is at 3:00-4:00 a.m. and 6:00-7:00 p.m., and sometime I work eight hours a night. It is very hard, and this sort of lifestyle lasts for many months. I take writing as a very serious matter, because it must be permanent and accurate. Every word has different meaning, because I deal with sensitive subjects, like Chinese politics, people and religion. Perhaps somebody doesn’t like everything I write about China, and some may disagree with me, but what I write is what I really believe. I know a lot of people will criticize me, particularly in the West. But I feel passionate when I determine to do what probably I haven’t done before, particularly in communicating how Chinese leaders think. The West has given a label to Chinese leaders, and they think all Chinese leaders think exactly the same. I try to show the diversity of Chinese leaders and how they think in different areas – not only in politics and the economy, but also in science, health care, religion, the military, culture and the media. We have to show how complex and diverse China really is. That’s the true story of China.

CP: As you said, China is a complex country and thus cannot be properly interpreted in a way of “blind men feeling the elephant.” How can you guarantee that what you write accurately depicts the true China?

Kuhn: Truth is a philosophic term. To some extent, everyone’s truth is different. I really do want to explore the real depth. One thing I appreciate is being able to speak with many, many leaders – senior leaders and middle-level leaders. By the way, what I do is to show all parts of the elephant even though we were all blind. In this book, especially its English-version, I try to show diverse areas. The more complex we are, the closer we get to the truth. What I try to do is depict the diversity of stories, from the role of women, bankruptcy, corruption, imbalance, pollution – all the problems and all the benefits, as well. The West thinks of China in simplistic terms: No freedom of speech, Internet censorship, blocking of websites and no religious freedom. But each story has complexity. It is true in the sense that I communicate what the leaders say. I bring together all these leaders and let them speak to the world, and let the world see their diversity. You may disagree with what these leaders say, but that is what they’re really saying. And I offer my own perspective, as well. I think revealing the diversity of leaders in different areas gets closer to the truth.

CP: I believe the purpose of your writing is to promote mutual understanding between China and the United States. In your book, you mention that Chinese and American people interpret differently the truth of the US-led bombing of the Chinese Embassy in Yugoslavia in 1999. In your opinion, how best may mutual understanding between the two nations be developed?

Kuhn: I used that tragedy to reveal that Americans don’t understand China. After the bombing occurred, Chinese students went to the US embassy and surrounded it. The American media said that the Chinese government encouraged the students to do so, and controlled the protest. They had proof that the government rented buses to take students from colleges and universities like Peking University and Tsinghua University to the US embassy. But what I learned by speaking with Chinese officials like Wang Guangya is that the government wanted to limit the protest. If the government let the thousands of students walk from their universities to the US embassy, thousands more would join them. This was completely misinterpreted by the American media. So, this was a fascinating way to demonstrate that you can see the same fact, but arrive at exactly the wrong conclusion. On the issue of whether the bombing was accidental or intentional, 90 percent of Chinese – maybe 99 percent – believe it was intentional, but perhaps 80 percent of Americans think it was an accident. Here is my role on the issue. What I do in this book is to present each view as accurately as possible. So, readers can see the facts everyone agrees on, as well as the Chinese interpretation and the American interpretation. Then they can come to their own conclusion.

CP: In this book, you review events occurring during China’s 30 years of reform. Which story most impressed you?

Kuhn: It’s a difficult question to answer, because each carries its own emotion. I think the example I used about the bombing of the Chinese embassy is a very important story because it shows the complexity of a real tragedy, as well as the difference between the opinions of Americans and Chinese, what leaders think and what I think. I like stories with that sort of complexity. Some of my favorite parts are about China’s reform that ordinary people have seldom thought about, such as the nation’s approach to religion, health care and culture. I met many wonderful figures and learned about their lives. I think this brings me the greatest enjoyment. It not only tells the stories of reform, but also personalizes the reform with individuals. Another aspect which to me is important, is deeply tracing the political philosophy of Chinese senior leaders, which some Westerners think of as a waste of time. To me it is important to follow Deng Xiaoping’s theory, Jiang Zemin’s political theory of the “Three Represents,” and Hu Jintao’s “Scientific Outlook on Development.” So, I try hard to show the world the importance of Scientific Outlook on Development. It is important for China’s current policies and political philosophy to be understood. They give the whole story coherence.

CP: In the course of your work, you have interviewed a great many senior Chinese officials, and even the main title of your book about China’s reform is How China’s Leaders Think. Can you in brief explain how those Chinese officials think?

Kuhn: The first generality that I like to point out is that there is no generality. There used to be generality, and everybody said the same thing using almost the same words, but today more represent diversity. I’d like to say that now Chinese trend to diversity, and they have more freedom to express themselves in different ways. Even in the government, there are many different opinions. If you ask the generality of Chinese leaders’ way of thinking, I used four concepts in the first part of my book: pride, stability, responsibility and vision.

CP: Your book about Jiang Zemin was one of the best-sellers of the year, and your current book is also selling well in China. Many readers are looking forward to your next work. Some predict that will be about Chinese President Hu Jintao. Is this true and, if so, when will it come out?

Kuhn: What I can tell you is that my current task is to finish the English version. The English version includes much about President Hu Jintao. Some like to think what they will do in the future, but I like to concentrate on what I’m doing now and try to do the best I can. Right now, my job is to finish the English version, which focuses a great deal on President Hu.

CP: At the end of your book, you talk about China’s future. In recent years, some foreigners have expressed concern that China will pose a threat to the rest of the world, at least economically. But since the recent global financial crisis, some look to China as the potential savior of the world economy. From the perspective of a senior investment banker, how do you evaluate the impact of the global financial crisis on China’s future?

Kuhn: This is a quite important question today. The financial crisis is hurting China, as it is hurting other countries. China’s role in the world became more and more important, not only because of its rich resources, but also because of its deep involvement in international affairs. After the crisis everybody’s situation worsened, but the West came down more, so China and the West are closer than they were. Because of this, China has more responsibility, not only for itself, but also for the international community. China can’t take good care of itself without taking care of the world, because now everything is interdependent.

Chinese president meets Turkmen, Uzbek counterparts on development of relations

Chinese President Hu Jintao held talks here on Sunday with his Turkmen and Uzbek counterparts in efforts to enhance ties and mutually beneficial cooperation with the two countries.

Chinese President Hu Jintao (L) shakes hands with Turkmen President Gurbanguly Berdymukhamedov in Ashgabat, capital of Turkmenistan, on Dec. 13, 2009. (Xinhua Photo)

During his talks with Turkmen President Gurbanguly Berdymukhamedov, Hu praised the cooperation between the two countries and outlined four areas to further their friendly links.

Hu called for an early establishment of the mechanism of Sino-Turkmen cooperation committee so as to better guide and coordinate practical cooperation between the two countries.

The Chinese president, who is in Turkmen capital Ashgabat for aworking visit, also urged efforts to step up their energy cooperation.

Hu said the China-Central Asia natural gas pipeline was a cooperative project that benefited the two countries and the whole region.

China is ready to work with Turkmenistan to secure smooth operation of the gas pipeline, and further advance bilateral cooperation in the oil and gas sector in line with the principle of equal consultation and mutual benefit, Hu said.

During his visit, Hu is scheduled to take part in a ceremony marking the completion of one of the two pipelines that make up the gas shipment project on Monday together with leaders of Turkmenistan, Uzbekistan and Kazakhstan.

The 1,833-km pipeline starts from the border between Turkmenistan and Uzbekistan, and runs through Uzbekistan and Kazakhstan before reaching northwest China's Xinjiang region.

Hu said China would make efforts to expand cooperation with Turkmenistan in sectors such as transport, telecommunications, building materials and infrastructure development. He proposed that the two countries should study and draft a plan of middle- and long-term cooperation in non-energy fields.

The two countries should also earnestly implement the credit projects they agreed upon by accelerating the inauguration of relevant projects, he said.

Noting that terrorism, separatism and extremism in Central Asiahave posed a serious threat to regional stability, Hu said China was ready to work with Turkmenistan to crack down on such forces.

Hu also emphasized cultural and people-to-people exchanges between the two countries, pledging more scholarships for Turkmen students to study in China.

Berdymukhamedov fully agreed with Hu's proposals for developing bilateral ties, saying Hu's visit was of special significance.

The long-term strategic partnership between the two countries is based on a high degree of mutual trust, mutual respect and friendship. Despite the changes in international situation, the Turkmen government and people will always firmly push forward cooperation with China, he said.

In the meeting with his Uzbek counterpart, Hu said China had always attached great importance to developing its ties with Uzbekistan, seen as one of China's important partners in Central Asia.

China is willing to work with Uzbekistan to further high-level exchanges, deepen pragmatic cooperation, and ensure the sound and stable development of the friendly cooperative partnership, Hu said.

On the China-Central Asia gas pipeline, Hu said the Chinese side was ready to work together with Uzbekistan to ensure a safe and smooth operation of the pipeline.

In terms of security, Hu said the Central-Asian region was confronted with grave security challenges. It is a common responsibility of all countries concerned, including China and Uzbekistan, to combat the "three forces" that engage in terrorism, separatism and extremism, he said.

Hu praised Uzbekistan's role as the rotating chair state of the Shanghai Cooperation Organization (SCO), saying it had actively coordinated the body's development and made a series of significant proposals.

Islam Karimov, on his part, said the development of bilateral relations was not only conducive to the two countries, but also of great significance to maintaining peace and stability in the Central Asian region.

He said China was one of the most reliable and trustworthy friends of Uzbekistan, adding that Uzbekistan would adhere to the one-China policy and firmly support China's strike against the "three evil forces", "Taiwan independence" and "Tibet independence."

Source: Xinhua

A Customer-centered Brand Building Strategy

-An Interview with Zhang Zhanxi, General Manager of the New Mainland Hotel
By staff reporter LIU CHENGZI

The New Mainland Garment Wholesale Market

Over the past three decades of reform and opening-up, the garment industry in China has seen fast development.Liuhua Garments Commercial Circle has had a prominent place in Guangdong Province's wholesale garment market, and even the greater China market. The area boasts varied styles of clothes and a large number of vendors selling to niche clients. As an important part of Liuhua Garments Commercial Circle, New Mainland Garment Wholesale Market is a professional large-scale marketplace which realized the importance of subdividing the market and brand building at a very early stage. In keen market competition, New Mainland Garment Wholesale Market has gone through ups and downs, transforming from a state-owned operation into a joint venture, and finally returning to state ownership. However, it has continually striven to build a professional market environment and brands for its vendors.

Not long after the 2008 China Liuhua International Garment Festival's conclusion, China Today interviewed Zhang Zhanxin, general manager of New Mainland Hotel in Guangzhou.

China Today: Most of New Mainland's business was formerly tied up in hotels. What circumstances lead to the company's involvement in the garment business?

Mr. Zhang: Once an enterprise matures, it will have its own future development and maybe it won't need us as its "incubator" any more. But we don't consider this a bad thing. A brand becoming successful in the New Mainland Market is the best result for us. Those successful brands serve as models for our future work. In fact, it is a win-win result, as only by continuously cultivating new brands can our New Mainland Garment Wholesale Market keep thriving in the long run.

Mr. Zhang: The New Mainland Hotel is a subsidiary of the China Import and Export Fair (aka Canton Fair). Every year when the fair is held, the hotel provides accommodation for a lot of guests and many of them rent rooms as demonstration areas for their commodities. Not long ago the Canton Fair started to be held at the exhibition hall on Liuhua Road, and the garment market on Zhanqian Road flourished. As our hotel is quite near both these places, we decided to take the opportunity and reconstructed 500 rooms of the hotel and turned them into a garment wholesale market.

China Today: The reconstruction must have been a huge project?

Mr. Zhang: Yes, of course. In fact at the beginning our customers weren't satisfied with hotel rooms that had been turned into shops. Most vendors in the district are famous domestic brands, such as Yingwei, Chengjiu and Yilun, etc, who attach great importance to their brand image. They also value the market environment very much. But the outward appearance of our original building looked ragged and old, and the interior decoration of each shop was also not good enough. So we couldn't attract famous brand vendors despite our good location. Therefore, we have invested over RMB 20 million since 1999 to refurnish our market, which covers eight floors. We installed cargo elevators inside and built huge glass walls outside. In this way our New Mainland Garment Market was set up "with the facilities of a high-class office building and the management of a star-rated hotel."

China Today: Can you elaborate on that last statement?

Mr. Zhang: This is an important idea underlying our management. "The facilities of a high-class office building" refers to a novel feature of New Mainland Market. We installed broadband and digital TV interfaces in every shop. We have introduced the use of advanced management software and set up a market website to make sure that everybody has access to information. Here in the market all the public computers have Chinese and English interfaces for the convenience of foreign customers. In terms of providing the management of a star-rated hotel, our security staff make an inspection every 45 minutes to ensure safety during transactions. Purchasers come here to take a look at the samples and place orders, and then they can leave, because the following procedures can be handled online. As we can't do much about prices and other transaction-related issues for our customers, we try to provide them with as much market information as we can, and help them get firsthand information to study market trends, in the hope that the overall garment business will flourish.

China Today: 2008 was an unusual year for the Chinese garment industry. Many problems emerged, such as difficulties with market positioning. Many markets introduced same brands and same quality goods, causing some to close down amid keen competition. How has the New Mainland Garment Wholesale Market tackled these problems?

Mr. Zhang: From the very beginning our market was different from others in the commercial circle. We focused on one aspect and paid a lot of attention to subdividing the market instead of developing a comprehensive marketplace. In 2000, we found the woolen textiles wholesale market had a promising future. So we provided all kinds of preferential treatment to attract vendors in that field and initiated the professional woolen textiles wholesale market in Guangzhou. It still stands as the largest woolen textiles wholesale market in the city, or even in China. Now we have more than 600 woolen textiles vendors, including most of the manufacturers of Guangdong Province, perhaps most in the whole country. The products here are mainly sold to Indonesia, the Philippines, the United States, Russia, the European Union and the Arab world. The point is how to subdivide the market and take the right market orientation. Here I can give a small example:the Liuhua branch of the Guangzhou Agricultural Bank located in our building took third place in Guangzhou in terms of business volume in its first year of operation, surpassing many other, long-established bank branches.

Vendors discuss business with iverseas customers

China Today: How does New Mainland build its own brand while selling goods for other brands?

Mr. Zhang: We divide our management to three stages: managing resources, managing brands and managing ideas. In the initial period when the market was being set up, we decided to build our market into a professional woolen textiles wholesale market after careful analysis of the market. That was to manage the woolen textiles resources. Then we started to build brands for our vendors. In the process of attracting vendors, we sent three teams to inspect many manufacturing bases, and introduced brands with development potential. Then we "nourished" the brands as a loving mother would her children. For example, we held free lectures on brand building for our vendors, and invited the media to help promote the brands. Also we jointly organized activities with the Guangzhou Clothing Trade Association to choose the New Mainland Top Ten Brands.

China Today: If a brand matures through the New Mainland Market it doesn't need the market any more. How does this affect New Mainland?

Mr. Zhang: Once an enterprise matures, it will have its own future development and maybe it won't need us as its "incubator" any more. But we don't consider this a bad thing. A brand becoming successful in the New Mainland Market is the best result for us. Those successful brands serve as models for our future work. In fact, it is a win-win result, as only by continuously cultivating new brands can our New Mainland Garment Wholesale Market keep thriving in the long run.

Zhang Zhanxin, born in 1954, pen name Xin Xing, native of Hengyang City, Hunan Province, has education experience in the People's Liberation Army Political Academy in Nanjing, postgraduate economics at the Guangdong Academy of Social Sciences, and the Executive MBA Program at Sun Yat-sen University. Since 1976, he has published essays and art reviews in dozens of newspapers in China and abroad. Now he is a member of both the China Writers' Association and the China Prose Society. He has published many books, such as Wars in Battle and in Business, Business Knacks, China's Calligraphy and Painting Market, and Invaluable Calligraphy and Painting Market.

Radical Shifts in China's Milk Market

By staff reporter ETHEL LU

THE recent melamine scandal has bitten deep into China's milk industry, smearing a number of reputed domestic names and ruining the companies. Sanlu, the principal company implicated in the scandal, now faces bankruptcy. It is, however, a rule of the market that as some players fall, others rise. So in the wake of the turmoil, China's diary market is undergoing an extensive shake-up.

Winners and Losers

Beijing-based Sanyuan is without doubt the biggest winner in the tainted milk scandal. Once the news came out that its milk was free of melamine, a noxious chemical detected in products of many prominent domestic companies such as Sanlu, Mengniu and Yili, the demand for Sanyuan milk skyrocketed. Overnight demand reached eight times the firm's production capacity. Its stock price rose by 64.4 percent in six days, from RMB 3.4 to RMB 5.59, in contrast to the sharp drops experienced by competitors.

Little known outside Beijing and its environs, Sanyuan had long lived under the shadow of giants like Sanlu, Yili, Mengniu and Bright, whose sales networks cover the whole nation. Now Sanyuan also enjoys national fame. Another rising star is Guangzhou's Kowloon Dairy Food Products Co., Ltd. Its four production lines have been running at full capacity since the melamine scandal. What's more, it was selected as the new supplier for Starbucks in China.

The situation of the former dairy giants is a stark contrast. Mengniu and Yili saw their orders shrivel by more than 80 percent in the ten days following the disclosure of melamine contamination on September 11. Though later batches of their products tested negative, it seems customers will not be won back easily.

Sanlu's tainted powered milk was dumped in Shijiazhuang, Hebei.


Dairy consumption is still a recent phenomenon in China. Ten years ago only babies and older people drank milk, mainly in powdered form. Starting in 1999 the sales of UHT milk grew at an annual rate of 89 percent for five years straight, so that in urban areas liquid milk consumption is now greater than powdered consumption. According to 2006 statistics, China's urban residents each imbibed an average of 22.54 kilograms of dairy products per year, comprising 22.04 kilograms of liquid (including 18.32 kilograms of fresh milk and 3.72 kilograms of yogurt) and 0.5 kilograms of powder. But this has not changed China's status as the world's largest powered milk market, where annual consumption still exceeds 1 million tons.

Prior to the melamine contamination scandal, Sanlu, founded in 1956, held the leading spot in China's powdered milk sector for 15 years, with a market share well above 18 percent by 2007. Emerging from a tiny factory of merely 32 cows and 170 sheep, the company evolved into a conglomerate with dozens of branches all over China, in partnership with the Fonterra Co-operative Group of New Zealand. But the company now seems doomed to be bought out and split up.

Negotiations are underway for Sanyuan to purchase seven plants from Sanlu, whose RMB 10 billion in sales in 2007 far outweighed Sanyuan's modest takings of RMB 1.1 billion. But it appears unlikely the former giant will survive the melamine scandal, given government support for Sanyuan's takeover bid and an offer of assistance from the CITIC Group to finance the deal.

Foreign Companies Sense Opportunities

Untarnished local dairy companies are not the only beneficiaries of the melamine scare. Until very recently, 80 percent of the liquid milk market in China was occupied by Mengniu, Yili and Bright. But all have been hit badly by the melamine crisis, and their market share is coveted by a horde of eager foreign competitors. While major Chinese dairy producers were occupied with recalling products and attempting to salvage damaged reputations, the Japanese brewery Asahi launched its first milk brand in China on September 21, 2008, conspicuously labeled as a "green" product. It has consequently sold like hot cakes, despite carrying a price more than twice the market average, although for the moment Asahi Green Source only produces three tons of fresh milk daily. The company mainly supplies hotels, restaurants and major supermarkets in big cities such as Beijing, Shanghai and Qingdao.

Asahi Green Source was established in April 2008 and obtained its operation license in August. The company insists that the fortuitous timing of its debut was not calculated, but it could not have arrived at a better time.

In the powdered milk sector international brands have always reigned at the upper end of the market. Statistics from 2007 show that one-quarter of the high-grade baby formulas sold in China that year came from U.S. company Meadjohnson, who raked in RMB 1.6 billion that year. They were followed by U.S. company Wyeth, with a 20 percent market share, and French company Dumex with 12 percent.

Tainted milk goes down the drain Wuhan, Hubei Province.

As domestic powdered milk is largely abandoned by customers, foreign brands are taking up the slack. Wyeth, for example, plans to build the world's largest powdered milk factory in Suzhou, Jiangsu Province, producing high-end baby formula. According to Xi Qing, the company's public relations chief, orders from large chain stores soared three-fold after the melamine scandal. Danone, the world's second largest dairy food group, merged with Miaoshi, a private dairy company, back in February 2008, and is working on similar deals with other home-grown companies.

Surging demand for better-quality powdered milk has also spurred imports. Customs figures show that in the first quarter of 2008 China imported 31,000 tons of powered milk, at the value of US $140 million, an increase of 5.5 percent and 95.9 percent respectively over the same period in 2007.

Huge Potential to Be Tapped

The per capita annual milk consumption of urban residents in China was merely 27 kilograms in 2008 — the figure was even lower in rural areas. This is far below the world average of 80 kilograms, or the 200 kilograms per head in developed countries. In the U.S. the figure consumed is 260 kilograms per capita, almost ten times the rate of consumption in China. It is estimated that only 300 million of the 1.3 billion people in China regularly drink milk, leaving a vast virgin market to be explored by dairy companies.

Since 2006 the government has launched a campaign to promote dairy consumption in an effort to enhance citizens' nutrition, under the slogan, "A glass of milk every day can make people stronger." Meanwhile, a local baby boom is taking place, lending momentum to the formula milk sector. Dairy companies see these conditions as offering an unprecedented chance to expand their business. Mengniu, for example, offered free milk to 500 rural primary schools under the "one glass of milk a day" movement, before the melamine scandal cast a shadow over the ardor for dairy products.

One of the few domestic brands unscathed by the crisis, Sanyuan ensures its quality control by running its own dairy farms. At present it has 27 dairy farms with 35,000 cows, producing 160 million kilograms of good-quality raw milk every year. Their model, though more costly, has been copied by other companies in the wake of the melamine scandal. Mengniu merged its small, dispersed farms, and placed them under direct supervision. Bright dispensed with supplies from individual dairy farmers, which previously accounted for five percent of its raw milk supply, and has instead incorporated individual operators into standard farms.

Kong Xiangzhi, a professor with the School of Agricultural Economics and Rural Development at Renmin University, predicts that it will take two or three years for China's dairy industry to recover from the blow of the melamine scandal. For companies like Mengniu and Yili, it will be an uphill battle regaining the trust of customers.

For all businesses, in the dairy sector and beyond, an old lesson has been proven true once again: quality is the cornerstone of a strong, long-term market presence.