Microsoft will spend $280 million on a Beijing research and development center and double its full-time R&D staff in China to 3,000 over the next few years, according to the Wall Street Journal.

Microsoft China’s chairman, Dr Zhang Ya-Qin, said during the center’s groundbreaking ceremony that China is the company’s largest R&D area outside the US. The center will be finished in 2010.

In 2006, the firm agreed to spend US$31 million on R&D labs in China, and it entered into an R&D joint venture with Lenovo last year. Microsoft’s decision to focus R&D on China indicates the country’s importance.

Microsoft does not disclose its revenue from the Chinese market. But Fortune Magazine estimated in a story last year that the software giant’s revenue from China would exceed $700 million last year, about 1.5% of Microsoft’s global sales.

All true and interesting. But no mention of the situation with AliBaba which is owned, in part, by Yahoo! which has just spurned, or been spurned (perspectives differ) by Microsoft. Perhaps AliBaba is the elephant in the parlor.
Source: China Economic Review Daily Briefing and Sinacom

Taiwan computer giant ASUSTeK Computer Inc. (ASUS) has recently laid the foundation for a RMB3 billion ($428.6 million) factory in Jianxi Province in the Chinese mainland.

In the preliminary stage the factory in Ji’an city will produce copper wire yarn and computer accessories. It will produce mainboards and assemble notebook computers in the future.

Annual production at the factory is expected to reach RMB10 billion.

ASUS has a global staff of more than 100,000. Revenue for 2007 reached $6.9 billion
The illustration was not chosen for the model — atlthough that helped — but for the new sub-mini Asus which is selling at very low prices and is creating a new market.

The 900 is based around an 8.9in, 1024 x 600 display.

It will contain 1GB of DDR 2 memory and a choice of 12GB or 20GB of solid-state storage, depending on which operating system you opt for. Both capacities are configured as two partitions: one 4GB space and either 8GB or 16GB.

The 20GB model will come with Linux, Asus said, while the 12GB version will be pre-loaded with Windows XP Home Edition.

Source: China View

The Microsoft Yahoo nonsense which is currently proceeding brings Baidu under the spotlight.

If you can think back a bit we may be in the same over-heated area we were in 2000. Then analyst Henry Blodget of Merrill Lynch said Yahoo price potential was around $425 even though at the time they were near the $300 mark.

He was more than somewhat off the mark.

Yahoo dropped like a stone in a muddy pond by more than 95% and ended in the $10 area. Recovered since then, of course. But it was an awful warning as to how far enthusiasm can go.

Citi thinks Baidu is a good buy and has increased its one year price target from $350 to $415.

This logic is, in a sense, helped by the fact the shares have almost doubled in the last month from the low $200s.

Past experience would tell us that last year they went up too far, too fast and are due for a correction. And that will not be in the direction suggested by Citi.

Now let us try pure reason.

The way matters stand at the moment the market is saying Baidua is worth nearly $13 billion. To put this into perspective add together most of the American airlines and their total worth is less.

Yet these airlines are estimated to generate revenues in 2009 of $86 billion.
A billion here, a billion there and suddenly your are talking real money.
This equates to more than 118 times Baidu’s expected revenues of $731 million.

Even though mathematics are not my strong point and in shares I am a conservative Welsh Calvinist Methodist there seems to me to be some sort of lack of logic herein that.

Baidu’s shares are selling at 91 times estimates of the 2008 profits and 57 times 2009 estimates of $6.54.
Google is selling at only 23 times 2009 earnings estimates.

OK, forget the airlines. Think of Google. And remember that Google is chip, chip, chipping away at Baidu’s share of the market in China.

Anything could happen because this is China and sometimes irrational decisions can be made. But, at the moment, I am not thinking of putting any of my meager earnings into Baidu. The lottery looks a lot more attractive.
Source: Seeking Alpha

Chairman Yang Yuanqing of Lenovo said the company is seeking acquisitions to regain the world’s third-largest personal- computer seller ranking lost to Acer last year.

In an interview with Bloomberg Television broadcast Yang Yuanqing said, ‘We are not satisfied with our current market share and global ranking. I believe there will be further consolidation in the industry and we hope to seize the opportunity to buy.’

Lenovo, the Chinese company that shot to prominence with the 2005 purchase of IBM’s PC unit, had its European expansion plans foiled last year when Acer bought Packard Bell.

Joseph Ho, a Daiwa Institute of Research analyst said, ‘It makes sense for Lenovo to want to acquire as it has the financial muscle. He rates Lenovo ‘outperform.’ But asks: ‘The question is what to acquire and at what price.’

Lenovo had cash and equivalents of $2.2 billion as of Dec. 31, according to the latest information from the company, which gets more than half of its sales from Asia.

The $1.25 billion purchase of the IBM business three years ago made the company the world’s third-largest computer maker.

Lenovo, which moved its headquarters to Raleigh, North Carolina, after the acquisition, lost the position to Acer in the second half of 2007, after the Taipei-based rival bought Packard Bell.

There are simply not that many possibilities around.

Lenovo’s current market value is $7.5 billion, about 6% of the size of industry leader Hewlett- Packard. Acer is valued at $5.4 billion.

Charles Guo, a Hong Kong-based analyst at JPMorgan suggested that for companies seeking to grab a larger share of the Chinese market, domestic PC makers such as Founder Technology and Tsinghua Tongfang may be takeover targets, said .

He said, ‘Acquiring Chinese players like Founder and Tongfang will give greater access to the market.’

Chairman Yang Yuanqing made the most remarkable statement when he said, ‘The most important thing is growing our market share, more than making money.’
Source: Bloomberg

Baidu.com is going to make a serious move on the online game sector in China.

The country’s No. 1 Internet search engine provider has already announced expansion into the instant messaging and online auction business.

Now, through cooperation with five game operators, including Shanda Entertainment, Baidu has launched its game site.

It is initially offering six browser games: Zongheng Tianxia, Tiankong Zuo’an, Fangbianmian Sanguo, Luanwu Chunqiu, Empire, and XBA Manager. You can see the basic idea at http://youxi.baidu.com.

At the moment these are free altough it is unlikely that will long continue.

Baidu, in a statement, said, ‘The games are Web-based, therefore they don’t require high-standard computers. The games on Baidu’s platform are green and healthy, without too much blood.’

Whether that is a sure and certain way to success is open to debate.

China’s online game market revenue was RMB12.8 billion ($1.83 billion) in 2007, and the figure will hit RMB40.1 billion in 2011, according to Analysys International, a Beijing-based IT consulting firm.

Robin Li, Baidu chief executive and chairman said Baidu’s new services aim to improve user loyalty and profitability of the company’s core search business.

Robin Lin said Baidu Hi, its new instant message tool, has been in public testing, and Baidu’s auction Website will debut this year.
Source: China View

The Ministry of Industry and Information said China witnessed a significant slowdown in mobile phone production in the first quarter of this year, as a result of the ongoing upgrading of product.

Between January and March, 141.29 million mobile phones were produced, a growth of 6.7% on the same period of last year. But the growth rate was 27.8 percentage points lower than the year-earlier level.

Motorola, a major producer which has operations in northern and eastern China, was said to be largely responsible for the the production decline in Tianjinand in Zhejiang, an eastern province.

Tianjin recorded RMB19.8 billion yuan ($2.8 billion) in revenues on mobile phone production in the first three months, down RMB5.2 billion yuan, or 20.8%. Zhejiang’s revenue on mobile phone manufacturing was RMB7.46 billion, down RMB6.4 billion, or 46.2 percent.

In 2007, China produced 548 million mobile phones. This is now a nation with more than 500 million mobile phone users. But and this is important, they are almost all G2 standard users. With the release of the home-grown G3 — TD-SCDMA — this is biggest market in the world for new, improved, and slightly more profitale, mobiles.

Nothing much will happen until the middle of the year and then you can expect to see the figures zoom.

There is no information as to whether our model is holding one of the new mobiles. And, frankly, it does not matter.
Source: China Daily

Perfect World, a leading online game developer and operator in China, is to collaborate with Intel and Haier Information Technology on a marketing campaign.

As a part of the collaboration, Perfect World’s ‘Chi Bi,’ the Company’s first 3D massively multi-player online role playing game (”MMORPG”) based on Chinese history during the famous Three Kingdoms period, will be the key visual component of the campaign.

This has been designed to show-off Haier’s latest Runyan Rui Zhi T68 notebook computers and Spark LightRunyan personal computers featuring the latest Intel processor technology with the 45 nm Intel Core 2 Duo processor.

Fast computers are not normally used at their full speed — it is not needed — until you play a MMORPG game when you need all the grunt you can lay your hands on.

No doubt, despite its historic setting, ‘Chi Bi’ will test it to the full.

It also gives lovely marketing and publicity hook for the three companies. And, ice-cream on top, there is a movie being made at the same time.
Source: PR NewsWire

The official word is that the third-generation (3G) mobile phone service is ready for use in the upcoming Beijing Olympics as the high-speed wireless connection service and related products were formally delivered on Monday.

China Mobile, China’s top wireless operator, and South Korean cell phone producer Samsung presented 15,000 3G handsets, plus data cards and nearly three million RMB($428,600) of calling fees (not cash), to the Beijing Organizing Committee for the 29th Olympic Games

With this excellent offer, work staff and volunteers of the Games can enjoy high-speed data transmissions, which allow them to watch televised games, play videos, and surf the Internet on cell phones.

The service is based on the Chinese 3G standard, known as TD-SCDMA (Time Division Synchronous Code Division Multiple Access).

China Mobile has basically finished construction of the TD-SCDMA network in eight cities, five of which are to host events for the Beijing Olympics in August, including Beijing, Shanghai and Tianjin.
China had promised to provide 3G service for the Games and this is sort of keeping the promise in the most populated parts of the country.

China Mobile is the sole cooperative partner for the Beijing Olympics in mobile communications services while Samsung is the only one in mobile terminal supply so the figures as stated will stand.

China Mobile started the commercial trials of 3G services in the country in April.The ITU, the International Telecommunication Union, recognized TD-SCDMA as one of the world’s three official 3G standards in 2000.

The other two are Europe’s WCDMA and North America’s CDMA 2000 and visitors who bring phones running to those standards will be able to do many things. But not watch the Olympics. Still it is a partal victory and we should give two cheers — somewhat muted perhaps — but cheers nonetheless.
Source: China.com

You have to be a bit careful here. The headline is literally true. Boosted by strong economic growth and government support for rural network construction, the online population in rural areas of China grew by an impressive 127.7%  last year, three times more than the expansion rate in urban areas.

And that means that China has edged out the US to have the world’s largest internet population of 221 million.

China Internet Network Information Centre (CNNIC) said about 29.17 million out of China’s 73 million new internet users, or 40%, were from the countryside, raising the internet population in rural areas to 52.62 million,

All absolutely true. But note carefully that most internet surfers were still from cities and online games are still a major, major force. Yes, the rural  population is getting connected but it will be a few years before it is using the Internet in the sense that it is generally meant.

The official Xinhua news agency reported 53.3% among rural residents who have yet to go online do not know how to use computers or the Internet, while 23.1% lacked Internet facilities.
Most of the rural Internet users — 61.4% — go online for news. Think of it as a selective television set.

And the country still lags well behind the U.S. in the percentage of their respective populations that use the Internet.

China currently has only a 16% Internet penetration among its residents — lower than the worldwide average of 19.1%, and well below the 72% usage rate in the U.S.

China began allowing individuals to access the Internet via dial-up services in 1995. China has promised full and unrestricted Internet access during August’s 2008 Olympic Games in Beijing despite concerns among security officials about possible cyberattacks.
Source: ComputerWorld and  The Economic Times

Chinese security officials are somewhat worried hackers will strike while the Olympic Games are being held in Beijing.

China’s National Computer Network Emergency Response Technical Team (CNCERT) said in a report released earlier this month, ‘Based on historical experience, many hackers seeking to make a name for themselves view the Olympic Games as a challenge and a target, and the Beijing Olympics may face attacks from individual hackers, groups, organizations, as well as other countries and those with all kinds of political motivations, therefore the network security situation is very grim,’

Well, yes and no. For a Chinese hacker to go at the Beijing Olympics would be monstrous. Other hackers would take is as unpatriotic and such a hacker, in the opinion of several hackers, would quicky be denounced.

And one can take it the authorities would not take a light view of it.

A high-profile attack on Chinese computer systems during the Beijing Olympics would be a serious blow to organizers and the government, which has worked hard to position the Games as a celebration of the economic and social strides made by China since embarking on reforms 30 years ago.

Jim Fitzsimmons, a security consultant in Shanghai said, ‘It’s very important for the government to make this successful. They are taking this issue very, very seriously. In terms of platforms that people could attack in China, or subvert to attack something else, there’s quite a bit out there.’

There is now a special response team in Beijing that will monitor systems for signs of attacks and then respond if one is detected.

So far, there has not been a response from foreign hackers to Chinese attacks against CNN or pro-Tibet Web sites. But hackers may simply be biding their time, choosing to attack or deface Chinese Web sites during the Olympics, a time when any such incident would generate the most publicity.

Fitzsimmons said, ‘I honestly believe something is going to happen, but how bad it could be or what is the scale of it, that’s anybody’s guess.’

One guess, devoutly believed here, is that it will happen but it will be relatively minor.
Source: PC World