Having written a bit about Shanghai’s growing video game industry in the past, I went over to the new branch of the wine bar Enoteca, near Xintiandi, to check out this IGDA event last night.

The guest was Bernie Stolar, billed as Google’s “games industry evangelist,” who was in town for several days. The choice of venue was slightly questionable - a portion of the wine bar was cordoned off for the IGDA meet, and when Stolar got up to give a short speech, the chatter from other patrons not involved with the meet practically drowned him out. Exasperated, he shouted “Hey, shut up!” at a group of loudly conversing women, who were not part of the meet, at the back.

Anyway, the speech was pretty standard stuff. A few dozen people from the game, tech, and media industry turned up at 9pm to hear what Stolar had to say. It was a decent turnout considering the time. Above the din, the main point he made was, “Follow your passion,” and “make games fun.”

Some Googlers from Beijing (one I spoke to was in business development) accompanied him to the event. Stolar’s in-game advertising firm, Adscape, was acquired by Google last year. In the past, he has said he is charged with looking at in-game ad opportunities for Google, though he didn’t mention it in his speech (from what I could make out, anyway).

Also spotted in the audience was Q Entertainment’s CEO Shuji Utsumi, who said he was in town to check out the games scene in Shanghai. Q is well-known for creative puzzle games like Lumines. Someone from Eidos (who put out Tomb Raider) was also there - apparently they’ve just set up a Shanghai office that will look at outsourcing, among other things.

From the looks of it, Shanghai’s game industry is getting more interesting by the day.

Lots of rumors about the long-awaited telecom restructuring this month. Interestingly, it was sparked by a Credit Suisse report that cited Yang Hua, sec-gen of the TD-SCDMA Industry Alliance, as saying that the central government could announce a decision on 3G licensing “within days.” According to Reuters, the report also said the State Council would meet this week to finalize restructuring plans, and that an official announcement would be made soon.

All the I-bank analyst reports I’ve ever read have been pretty dry (Jonathan Anderson at UBS excepted!), and certainly not a source of exciting breaking news. Now, I’m interested in getting my hands on a copy of the CS report.

Then Marbridge Consulting’s daily newsletter provided a slew of Chinese-language media stories circulating the same rumor. Sina Tech regurgitated the Credit Suisse news. Tencent Tech reported on internal moves at the telcos suggestive of restructuring plans.

SCMP added fuel to the fire, with a report citing anonymous sources claiming that the plan had already been confirmed at a State Council meeting in Beijing last Friday. It said that another meeting this week would be held to work out implementation and management issues.

“The proposal is being discussed and the officials are going to decide senior management at the operators,” a source said yesterday.

Yesterday, I also noticed that Isaac Mao’s Twitter feed contained a message about a share-swap between Unicom and Netcom, although a check through HKEX and SEC filings yesterday didn’t reveal any announcements about it.

Stocks of China Telecom have risen because it’s expected to get a mobile operating license after the restructuring, while China Mobile shares dropped.

The Reuters story also said that Yang, Credit Suisse’s source, rebutted the report.

“It could be early, it could be late, but it won’t be soon,” Yang told Reuters in an email provided in response to questions.

So - the rumors continue to build. It’s worth noting, though, that this restructuring has been years in the making. Nothing may come out of it this time.

Links

Reuters: China close to telecom sector revamp, analysts say

SCMP: Telecoms carriers in play on talk of industry reform completion

Marbridge Daily: Rumor: State Council to finalize telecom restructuring plan

Marbridge Daily: Rumor: Telecom operators prepare for restructuring

Good news for Apple fans in China. According to Southern Metropolitan News (translated by Marbridge Consulting’s excellent daily news digest) Apple will release the iPhone here in the second quarter. It will be priced at RMB4,000 (US$500-odd, which is quite a bit higher than the US$400 it goes for in the US). It also says iPhone will be released “in partnership” with mobile operators, but doesn’t say who.

The leading candidate is, of course, China Mobile. In November, China Mobile boss Wang Jianzhou said he was talking to Apple about selling the phones in China. “Our customers like this kind of fashionable product,” he reportedly told an audience in Macau. If you remember the hoopla surrounding the iPhone’s release, Apple said it would launch the handsets in Asia sometime in 2008, without giving any details. My theory at the time was that it would be sold in places like Japan, Singapore, Hong Kong and Taiwan way before Apple could hash out a deal with China Mobile. Apple, after all, likes to be in control, and it doesn’t have much leverage with China Mobile, the world’s biggest telco. Either Apple is desperate to get its phone into China or China Mobile’s pretty flexible at the negotiating table. Either way, if the news is correct, you should hold off on buying one of those hacked iPhones from the cybermall down the street.

Highlights from the last week of China business news.

The petroleum pinch
The price of crude oil is at a historic high, and China is feeling the pain. Beijing raised gasoline and diesel prices today by almost 10% as crude oil nearly hit US$100 a barrel, despite guarantees that it wouldn’t raise prices at all this year to help keep inflation low. Looks like you can forget about that for now. Price pressure has forced small refiners to stop operations and created fuel shortages around the country. Even state-run oil and gas behemoth Sinopec was grumbling. China complained about the ridiculous state of oil prices at the OPEC energy roundtable last week, but to no avail, it seems. It’s not just oil that’s in short supply. Iron ore prices are projected to increase by up to 50% next year, thanks to China’s appetite for steel. Mining companies like Australia’s BHP Billiton are eager to cash in on this; it’s proposed a new pricing system that will make the commodity much more expensive for Chinese steelmakers. The commodity crunch is not all bad, though: It could generate demand for things like hybrid and clean-fuel cars, like the ones GM is starting to develop for the Chinese market.

The Asian space race heats up
A new space race has begun in earnest. As we mentioned last week, China and Japan now have probes orbiting the moon, following China’s successful launch of its module last week. Days later, it announced that it plans to build a new launch base on Hainan island, better known as China’s tropical getaway. The ambitious plan for the base includes relocating 6,000 people - a trifling number next to the multitudes displaced by other large-scale national prestige projects in China. It’s scheduled for completion in about five years. Why the haste to build a new base? It’s because China wants the optimal low-latitude location for its new series of Long March 5 rockets. Rockets launched from lower latitudes can carry larger loads, which incidentally is exactly what the new rockets will be designed to do. They’ll carry heavier loads of communications satellites and lunar probes, and will be launched from the new Hainan base. India is scheduled to join the fun next April, when it is slated to launch its own lunar probe. Last country with a man on the moon is a rotten egg!

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China tech-watcher Paul Denlinger’s post about the country’s decrepit internet cafes (which he calls “shitholes and firetraps“) has been making the rounds among the China blogging elite lately. Beijing-based Wikipedia expert Andrew Lih agreed with Denlinger’s view in rather milder language, calling them “digital opium dens.” Kaiser Kuo, a CER alumnus who’s gone on to bigger and better things - like being Ogilvy’s China new media boss, also riffed on Denlinger’s views.

In short, Denlinger said that the majority of China’s internet cafes were terribly unpleasant places to spend your time: smoke-filled, poorly lit and generally dingy. In a follow-up post, he asked, why hasn’t some smart entrepreneur started franchising internet cafes on the scale of a McDonald’s or Starbucks (he even mentions Apple, but that seems a little implausible to us)? The opportunities are there for the taking.

It seems someone has been thinking just that for awhile now. We read a news item in the Asian Venture Capital Journal in September reporting on Intel Capital’s second-round investment in BigCafe (China) Holding Corp. The amount invested was undisclosed. But what is known is that BigCafe (please, guys, lose the heavy Flash intro) was started in 2006 and has 1,000 net cafes around the country operating under its own brand. It plans to double that number by year’s end (perhaps underscoring the futility of the government’s supposed freeze on new internet cafes through the rest of the year), and it owns another 10,000 outlets that operate under different brand names, which it bought recently.

BigCafe doesn’t just run its own chain. It’s also apparently targeting some of those firetraps Denlinger fingered. It provides management services like staff training, marketing consulting and advising on property insurance (important for any fire hazard) and financial services.

The cafe chain looks like it’s in good hands. Prominent Chinese blogger Isaac Mao’s United Capital Investment was a first-found investor in BigCafe. Intel certainly thinks so. An Intel Capital spokesman told the AVCJ that “BigCafe is poised to play a major role in the internet cafe industry and Chinese users will benefit.”

Highlights from the last week of China business news.

Democracy, but only within the party
While we wait breathlessly for the new leadership lineup next Monday, at the close of the twice-a-decade Party Congress, we’ll just have to content ourselves with these morsels about the CPC’s burgeoning “intraparty democracy.” Say what? President (and party boss) Hu Jintao said in his key speech to the Congress that the party is working to “expand intraparty democracy to develop the people’s democracy.” Xinhua noted that Hu uttered “democracy” more than 60 times during that speech (which, by some accounts, was a 2.5-hour test of attendees’ stamina). Then, the party’s HR chief, who vets promotions and appointments, said “Democracy within the party is the lifeline of the party,” but also added, “Likewise, unity is also the lifeline of the party.” Huh? The markets, meanwhile, paid no attention to this game of ideological tongue-twisters. The Shanghai Composite broke through the 6,000-point ceiling on October 16, setting a new record. Making money trumps politics, for now, it seems.

High-tech picks up speed
Just as talk of a second internet bubble in the US starts to gain traction (don’t believe it? This great New York Times article will convince you), Alibaba, right on cue, pops up with its IPO. Jack Ma, Alibaba’s pugnacious boss, has made plans to raise US$1.33 billion on the Hong Kong Stock Exchange, which would make it China’s biggest tech IPO to date. If all goes to plan, Alibaba will receive a net profit of more than US$80 million. Ma has already bested foreign pretenders like eBay, who dared encroach on his turf (Alibaba’s auction site Taobao dominated eBay in the local e-auction market). Now, pockets lined with cash, it looks like he’s ready to start the next phase of Alibaba’s rise and rise. Another smart Chinese player, telecom firm Huawei, is also making its mark felt abroad. Last week it announced a plan to buy 21.5% of 3Com, the US network equipment manufacturer. The folks at the Shenzhen Stock Exchange must have been paying attention - Huawei, after all, is still a privately held company, although it’s already a global telecoms equipment player. The exchange will launch a new growth enterprise board targeting high-tech companies, part of a national plan to accelerate the country’s tech sector, which also includes a US$10.7 billion investment from China Development Bank.

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Highlights from the last week of China business news: Hu Jintao has a few aces up his sleeve in the run-up to the party congress; the world’s largest standing army, the PLA, gets in on this whole ‘internet’ thing.

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Highlights from the last week of China business news: Lenovo is badly outmaneuvered by rival Acer; German Chancellor Angela Merkel beats the human rights drum on a visit to China.

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Highlights from the last week of China business news: A minister calls a mining accident a “natural disaster”; the Shanghai Composite Index crosses the 5,000 mark while new securities regulations are introduced

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The European Union Chamber of Commerce put on a rather good seminar this morning in Shanghai on the clean development mechanism (CDM) and how it’s implemented in China. (Go to the UN’s CDM page for all the details)

The CDM event assembled a well-informed panel of speakers. Dr Wang Yong and David Arthur, of top environmental consultancy firm ERM, bookended the presentations, while Peter Corne, a lawyer with Eversheds, took the middle slot.

The highlights:

-Shanghai is especially susceptible to rising sea levels because the city has sunk. From 1921 to 1965, the city sunk 2.6 meters, although that rate has decreased in recent years.

-Wang Yong: “Global warming is here and now”

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