Identifier
Created
Classification
Origin
09SHANGHAI145
2009-04-01 05:42:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Consulate Shanghai
Cable title:  

(SBU) U.S.-LISTED EAST CHINA FIRMS SEE SILVER LINING IN

Tags:  CH ECON EFIN ELAB 
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VZCZCXRO5905
RR RUEHCN RUEHGH
DE RUEHGH #0145/01 0910542
ZNR UUUUU ZZH
R 010542Z APR 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7778
INFO RUEHBJ/AMEMBASSY BEIJING 2647
RUEHCN/AMCONSUL CHENGDU 1861
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGZ/AMCONSUL GUANGZHOU 0317
RUEHHK/AMCONSUL HONG KONG 2029
RUEHML/AMEMBASSY MANILA 0062
RUEHUL/AMEMBASSY SEOUL 0418
RUEHGH/AMCONSUL SHANGHAI 8417
RUEHSH/AMCONSUL SHENYANG 1852
RUEHGP/AMEMBASSY SINGAPORE 0247
RUEHIN/AIT TAIPEI 1649
RUEHKO/AMEMBASSY TOKYO 0612
UNCLAS SECTION 01 OF 02 SHANGHAI 000145 

SENSITIVE
SIPDIS

STATE FOR EAP/CM, DAS DAVIES
TREASURY FOR OASIA/INA -- DOHNER/HAARSAGER/WINSHIP
TREASURY FOR IMFP -- SOBEL/CUSHMAN
USDOC FOR ITA DAS KASOFF, MELCHER, MAC/OCEA
NSC FOR LOI, SHRIER
STATE PASS CEA FOR BLOCK
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/KATZ/MAIN
STATE PASS CFTC FOR OIA/GORLICK

E.O. 12958: N/A
TAGS: CH ECON EFIN ELAB
SUBJECT: (SBU) U.S.-LISTED EAST CHINA FIRMS SEE SILVER LINING IN
ECONOMIC CLOUDS

UNCLAS SECTION 01 OF 02 SHANGHAI 000145

SENSITIVE
SIPDIS

STATE FOR EAP/CM, DAS DAVIES
TREASURY FOR OASIA/INA -- DOHNER/HAARSAGER/WINSHIP
TREASURY FOR IMFP -- SOBEL/CUSHMAN
USDOC FOR ITA DAS KASOFF, MELCHER, MAC/OCEA
NSC FOR LOI, SHRIER
STATE PASS CEA FOR BLOCK
STATE PASS USTR FOR STRATFORD/WINTER/MCCARTIN/KATZ/MAIN
STATE PASS CFTC FOR OIA/GORLICK

E.O. 12958: N/A
TAGS: CH ECON EFIN ELAB
SUBJECT: (SBU) U.S.-LISTED EAST CHINA FIRMS SEE SILVER LINING IN
ECONOMIC CLOUDS


1. (SBU) Summary. A group of New York Stock Exchange-listed
Chinese firms based in East China recently expressed a
relatively upbeat perspective on prospects for their corporate
growth in East China, while most also described the past winter
as a hard one. Many of the firms are expecting to boost sales
in China, in part because of the Chinese Government's fiscal
stimulus plans. End summary.


2. (SBU) On March 30, Ronald Kent, Executive Vice President,
NYSE Euronext, hosted the Consul General at a lunch with local
NYSE-listed companies. Other attendees at the lunch included:
Li-Lan Cheng, Chief Financial Officer, E-House China; Eric He,
Chief Financial Officer, Giant Interactive Group; J. Matthew
Szymanski, Vice President, Corporate Relations, Semiconductor
Manufacturing International Corp. (SMIC); Gareth Kung, Senior
Director, Accounting Division, SMIC; Thi Yip Kok, Chief
Financial Officer, WSP Holdings Limited; Simon Li, Supervisor,
CEO Office, Trina Solar Ltd.; Julia Xu, Vice President, Investor
Relations, Renesolar Ltd.; and Qian Haibo, Secretary to the
Board of Directors, Simcere Pharmaceutical Group.

============================
Companies Anticipate Improving Sales
============================


2. (SBU) The lunch attendees all expressed a relatively upbeat
perspective on prospects for their corporate growth in East
China, while most also described the past winter as a hard one.
SMIC's Szymanski said that the chip business is cyclical, so
chip producers are used to ups and downs, but that the sharp
slowdown in December 2008 was completely unanticipated--"it was
as if someone had hit the emergency stop button" on sales, he
said. However, sales in January and February were marginally
better, month over month, and Szymanski expects March to show
further improvement. Szymanski attributed this in part to
China's economic stimulus measures, including the national
government's Household Appliances to the Countryside (jia1dian4

xia4xiang1) program. Since everything has a chip in it these
days, said Szymanski, purchases of refrigerators, clothes
washers, and other appliances support chip sales. SMIC's Gareth
Kung said the deployment of 3G telecommunication technologies
will provide a sales boost even bigger than the rural appliances
initiative. Looking forward three to five years, smart chips in
medical sensors implanted in patients could be a significant new
sales stream for SMIC, Kung said.


3. (SBU) Consul General Camp polled her table of company
representatives, asking if they felt business was looking up,
and all agreed. Thi of WSP Holdings--a maker of special oil
drill pipes--commented that sales were down 35 percent, but that
WSP Holdings is hiring more staff. The company wants to
position itself to gain market share once the recovery takes
hold in 2010, Thi said. WSP's domestic Chinese sales are about
half total sales, said Thi, and the company wants to raise this
percentage. Giant Interactive distributes online games, and CFO
He said that the company is expanding fast, with most customers
at the two ends of the income spectrum. Young college students
and corporate executives both like to play online games, said
He, with the latter especially interested in wielding authority,
and winning, over other players.


4. (SBU) Renesolar's Xu said that Beijing's announcement on
March 26 of a subsidy for users of solar electricity generation
panels is boosting her company's sales prospects. (Note:
According to press accounts, the Ministry of Finance will
provide a subsidy of RMB20, or approximately US$3, per installed
watt of capacity in an array totaling 50 kilowatts or greater.
End note.) Xu said stock valuations for Chinese solar-power
related companies had immediately soared on the news, and that
she had expected them to fall back, but investors were still

SHANGHAI 00000145 002 OF 002


holding onto them.


5. (SBU) Simcere's Qian was upbeat about the company's
near-term prospects, explaining that the pharmaceutical industry
in China has been the sector least affected by the global
economic slowdown, since people still get sick and need medical
treatment. Simcere employs 2,000 persons in Nanjing, and funds
laboratories in the Lost Angeles area as well as at Beijing's
Tsinghua University, which is a big source for new hires.
Simcere holds a patent on an anti-cancer drug and has many other
drugs in its development pipeline, said Qian. It is
establishing an office in the New York City area and is eager to
work with major pharmaceutical companies.

============================
Comment
============================


6. (SBU) The companies participating in the lunch are not
representative of the range of industries in East China, being
new technology-related companies successful enough to list on
the New York Stock Exchange. Therefore, their upbeat assessment
of short-term sales growth prospects cannot be generalized to
all East China. On the other hand, they hail from several areas
in the Shanghai consular district--including Changzhou and
Nanjing of Jiangsu Province and Jiashan of Zhejiang Province, in
addition to Shanghai--providing a sense of the bright spots
among East China industries.
CAMP