Harbin Business Exchange in Brief
A Weekly Email Update . . . December 8, 2005

in this issue

Surprising Harbin - Snow Tourism

Venture Capital Sponge

Lane Crawford Pushes to Mainland China

Continued Growth for Harbin Electric

Luxury Goods Expansion

Water Safe to Drink

Vaccine Supply Meets Demand


Surprising Harbin - Snow Tourism

Did you know . . . as most cities begin to see visitor numbers drop off with the on set of cold weather, attractions in Heilongjiang gear up for their busiest time of year. "Heilongjiang's rich ice and snow resources are an invaluable treasure waiting for exploitation," said Shi Weijie, deputy secretary-general of the provincial government. A province where winter lasts for six months, Heilongjiang has been investing in ice and snow-related activities to boost tourism and the local economy. Government departments in the province have discovered a gold mine in the ice and snow entertainment industry.

This year's snow and ice festival will double in the number of artworks available. This will include the world's largest ice restaurant and the world's highest ice clock tower (which is a replica of the clock tower in Moscow's Red Square).

Meanwhile, a ski resort in Heihe, Heilongjiang, China's northernmost province yesterday became the country's first to open its slopes this winter. The Heihe Longzhu Far East International Ski Resort, on the China-Russia border, opened its gates to about 200 tourists from both countries yesterday.

Back in the U.S., a cold spell has hit Orlando, bringing an ice storm to the Sunshine State just in time for the holidays! The Gaylord Palms Resort & Convention Center will play host to "ICE!", a holiday attraction hand-carved from nearly two million pounds of ice. Guests have an opportunity to visit a whimsical winter wonderland of interactive environments and larger-than-life, three-dimensional ice monuments and sculptures.

Several scenes will be featured, including a heartwarming Victorian holiday scene, Santa’s Toyland, and a majestic Church in the Woods. The sculptures are carved by teams of artisans from Harbin.

Dear Friends:

Jill continues to work from our office in Harbin. Her planned return on December 8 has been postposed a few days to complete some business.

While in Harbin, Jill enjoyed lunch with former Mayor Wang Zhongzhang. It was under his leadership that the HBE was launched. He has been a most steadfast friend and supporter. Since leaving the mayor’s office, He has assumed major responsibilities as a representative of the People’s Congress in Beijing.

We are pleased to report that the water polluted by the upstream industrial accident in Jilin City has passed, and everything is back to normal. There was not a single case of sickness or death from the water situation. This was due to the quick and effective action of municipal government. Anheuser-Busch, was even able to continue operation throughout the emergency. To heck with the water. Being without beer may have triggered public panic.

Speaking of trips. We will be retuning to Harbin for the amazing International Ice and Snow Festival. If you would like to tag along, we have a special package deal. This is all very informal, just let us know if you want to escape the cold of Chicago for the Winter wonderland of Harbin – still cold, of course.

On a personal note . . . if you think my life is all about serious issues and important business, you should know I just published a book that can only be called “silly” – at least I hope so. For those who collect anything, or go to garage sales, estate sales and second hand stores, you may want to check out www.acrapulate.com. You will not only see what I have been up to in my spare time, but you can actually make my Christmas better by buying the book. If you think this is shameless self- promotion, you are correct. It is just that I could not find a public relations agency willing to take the “self” out of “shameless promotion.” Let me know what you think. You just may get a kick out of it.

Have a productive week.

Larry Horist - Chairman HBE

  • Venture Capital Sponge
  • China's appetite for venture capital has grown to about USD 5 billion a year. The risk appetite has gone up tremendously,' says Sun Chang, the Managing Director of Warburg Pincus China. Warburg Pincus set up in China in 1995 and has since become one of the country's most active foreign venture capital firms. The company's most recent acquisition is its 22.5 pct stake in China's Harbin Pharmaceutical Group Holding Co Ltd.

    China's venture capital pool is being expanded dramatically by the contributions of global, regional, country-specific and corporate investors. Sun believes that the flood of venture capital is sustainable, given that China is now translating strong growth at a macro level into corporate profits. In particular, he said that Internet companies, particularly online gaming firms, and consumer electronics are still 'very hot' for venture capitalist.

  • Lane Crawford Pushes to Mainland China
  • Lane Crawford plans to open wholly owned department stores in the mainland in the next two to three years to cash in on the liberalization of the country's retail sector. "We are actively looking at the China market, particularly in Beijing and Shanghai," said David Riddiford, the President of Lane Crawford. Lane Crawford entered the China market five years ago, when it opened its Shanghai store in October 2000. The company also has two franchise stores in Harbin and Hangzhou.

    From December 11, China will allow foreign retailers to run 100 percent owned stores as part of its commitments in joining the World Trade Organization. "The big question mark about China is how fast will the Chinese consumers develop into a critical mass," Riddiford said. Only 1 percent of China's population - or 13 million - earns more than US$5,000 a year, while 56 percent earn less than US$500, according to a CLSA report. This means the China market is still not mature enough for high-end department stores like Lane Crawford.

  • Continued Growth for Harbin Electric
  • Harbin Electric, Inc. reported third quarter 2005 net income of $2.98 million, or $0.19 per share, on sales of $7.04 million. ''The first nine months of 2005 have produced solid results and growth and our domestic China market remains strong,'' commented Yang Tianfu, Chairman and CEO of Harbin Electric. Growth in sales and earnings for the year-to- date period is driven by the continued increases in sales within the China's domestic market.

    As previously mentioned in our newsletter, the newly appointed Vice President of Finance & Corporate Development, Mr. Barry Raeburn, will head Harbin Electric's corporate development efforts focused on customer and investor communications outside of China. Corporate offices have been established in Philadelphia to support their international growth.

  • Luxury Goods Expansion
  • French luxury-goods maker Louis Vuitton (LV) opened its second store in Beijing on Friday with a new collection of merchandise. Last year, the company opened a similar shop in Shanghai, and it plans to open another in Hong Kong at the beginning of next month. "We plan to open an average of two to three stores each year in China," said Yves Carcelle, LV's chairman and chief executive officer.

    According to Carcelle, there are at least 10 Chinese cities that the company aims to expand to including Chongqing, Harbin, Shenyang, Wenzhou and Sanya. Serge Brunschwig, managing director of LV, said all the China shops are making a profit due to the country's strong consumption trends. "Chinese customers like our products, which carry a lot of tradition, history, excellence in production, and creativity. They (the Chinese customers) like them so we have invested more," he said.

  • Water Safe to Drink
  • Water tainted by a toxic chemical spill upstream from this northern Chinese city was declared safe for drinking on Tuesday, five days after supplies to 3.8 million people were shut down. "Harbin's water is now safe to use and drink," Xiu Tinggong, vice director of the city's health inspection bureau, said on local television. "Everybody can rest assured that the water is safe." Running water was turned back on in Harbin, the capital of northeastern Heilongjiang province, on Sunday after supplies were shut down following a Nov. 13 explosion at a nearby chemical plant that spewed toxins in the Songhua River.

  • Vaccine Supply Meets Demand
  • China's Ministry of Agriculture said in Beijing on Monday that the country now produces more than 100 million doses of bird flu vaccine every day, which can meet the demand in major areas for epidemic prevention and control. A press release on the ministry's website says the ministry has enhanced the research, manufacture and quality supervision of bird flu vaccine to guarantee supply.

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