Nothing says more about China's booming auto market than the generous bonus given by the FAW-Volkswagen Automotive Co. The joint venture carmaker awarded its employees with a bonus that equals to 27 months of salary. On top of that, employees also received double salary for eight months this year.
The news broke in the online community with an internal PowerPoint file posted by an anonymous user. Other online users said that employees who logged full attendance this year could have received up to 63 months of salary.
The Legal Evening News then contacted FAW-VW and confirmed that the file was authentic and the facts were true.
I used to think that type of pay structure - annual total income equally many times of base salary - only happens in the financial sector. Boy, I was wrong.
The trend of pay increases in the past five years is phenomenal. In 2007, FAW-VW gave employees double-salary for two months of the whole year. That number has since been on the rise steadily - five months in 2008, six months in 2009, seven months in 2010, and eight months in 2011.
In an attempt to play it down, FAW-VW explained to the Legal Evening News that base monthly salary only accounts for about a third of the total take-home monthly income. The year-end bonus is 27 months of base monthly salary, not 27 months of total monthly income. The source added that a "normal employee" (meaning non-managerial?) has 3,000 yuan of monthly base salary.
It's ambiguous whether the double pay is included in the "take-home monthly income" the source referred to. If it is, a "normal employee" would have taken home 189,000 yuan (US$29,814) in 2011. That is equivalent to about $39,752 (pre-tax, assuming 25 percent tax rate) in the U.S.
If the double pay is NOT included in the "take-home monthly income," a "normal employee" would have taken home 261,000 yuan (US$41,141) this year. That is equivalent to about US$54,854 (pre-tax, assuming 25 percent tax rate) in the U.S.
Keep in mind, also, that the FAW-VW workers are located in cities like Changchun and Chengdu, where living expenses are relatively low.
Is my calculation correct? If the average Chinese worker at an auto plant makes that much, no wonder many Chinese consumers are now able to afford soaring property prices, overseas vacations and education, and luxury goods.
Now, if you didn't get a fat bonus like that, perhaps it'd be smart to think about how to get into a business that serves China's new middle class and wealthy groups.
Japan's beverage manufacturer Ajinomoto General Foods (AGF) has unveiled a new plastic bottle that's made from 100 percent recycled PET, and will start to expand its use to all of its main products starting in February, Japanese media reported. The company expects to consume 4,500 metric tons of recycled PET in the new bottles annually.
According to the Nikkei Business Publications, PET Refine Technology Co., a subsidiary of Toyo Seikan Group, supplies the bottles to AGF. The company uses its chemical recycling technology.
AGF said the chemically recycled PET costs about the same as virgin PET. Toyo Seikan said it managed to reduce production costs through equipment improvements.
The Nikkei report said the Japanese industry previously had two players that carried out bottle-to-bottle PET recycling -- PET Reserve and Teijin Fiber. However, due to raw material shortages caused by waste bottle exports to China, PET Reserve filed bankruptcy in 2008 and Teijin suspended the recycling business.
PET Refine Technology took over PET Reverse and continued to develop the market, the report said. It supplied 19,500 tons of recycled PET resin to beverage manufacturers in 2010.
AGF is a joint venture of Ajinomoto Co. Inc. and Kraft Foods Inc.
China's leading bioresin maker Wuhan Huali Environmental Technology Co. Ltd. has secured a US$30 million equity investment from the Standard Chartered Bank (SCB), which is aimed to help the company launched an IPO in the United States.
Huali said in a statement that it plans to expand capacity and make acquisitions with the funding. An executive from SCB told the Chinese press that the investment, to be followed with another $20 million, is aimed to help Huali launch an IPO in the U.S.
Zhang said he originally planned for an IPO in the U.S. this year. However, due to the recent wave of accounting scandals of U.S-listed Chinese stocks, coupled with the gloomy economic prospect of many global markets, Huali adjusted its timing.
SCB carried out meticulous due diligence before making the decision to invest in Huali, Zhang added, with industry research and evaluation by Nexant Inc. and financial due diligence by Ernst & Young.
The company's annual sales have been growing at a rate of 80 percent yearly for the past four years, said founder and chairnman Zhang Xianbing. He expects to see 400 million yuan (US$62.8 million) in sales and 60 million yuan (US$9.4 million) in profit this year, compared to 40 million yuan (US$6.3 million) in 2010 profit.
Huali reports current capacity of 40,000 metric tons. Its PSM biodegradable resin products are certified by the major international standards, including EN13432 and ASTM D6400. The company said it's also a member of the ASTM D20 international technical committee.
Huali had attracted other investments in its 11-year history, including a US$5 million venture capital investment from a Hong Kong-based fund in 2004 and US$13.5 million combined from DT Capital Partners and Draper Fisher Jurvetson.
Despite Apple's preference for metal housings for its lightweight notebooks, capacity and cost constraints are pushing the company to switch to alternative materials such as plastic.
According to a recent report from Taiwan's DigiTimes, the ultrabook laptop's traditional aluminum unibody chassis is time-consuming to manufacture. One CNC machine can only produce eight pieces per day.
Catcher Technology, the world's largest unibody chassis maker and Apple's main supplier, was ordered in October by Chinese regulators to shutdown part of its facility in Suzhou, due to complaints about possible pollution from the plant. Even though the plant resumed full production by the end of October, capacity shortages seem to remain an issue.
DigiTimes quoted unnamed industry sources revealing Apple's plans to make three different versions of ultrabook - the high-end version continuing to use the all-metal enclosure, a mid-level model adopting a new design that's plastic in the inside and metal on the outside, and the low-end version featuring enclosures made of fiberglass and plastic.
It is reported that an all-metal enclosure costs $40-80, while the plastic-incorporated new designs cost only $20-30.
In an interview published Nov. 21 by the Wall Street Journal, Republican presidential candidate and former U.S. ambassador to China Jon Huntsman Jr. stated his position on a number of China affairs, noting that political realities need to be considered when looking at trade issues.
He recommended letting the currency issue "take care of itself" and not wasting years on trying to impose tariffs:
"There are certain things that could make the situation really bad for this country at a time when we can least afford it. I say the currency issue's going to take care of itself.
...
The renminbi has appreciated 30% in the last several years. It will continue to at a rate of maybe 5% to 8%. Because China is driven by its own interests to revalue the renminbi based upon market realities, they will arrive at a point in the years to come where they'll have more of a market-based currency. Whether we tell them to do it or not, they will arrive at that point.
You certainly don't impose tariffs. As a former trade ambassador, I'm not sure how you do it through the World Trade Organization. There's no provision that allows one to do it through the WTO. It's unprecedented. And then what happens? The Chinese will then take the case to the WTO. Two years are wasted on nonsense. And you've blown through bandwidth that otherwise should've been used on intellectual-property protection, expanding market access for financial services and insurance, and working on regional security issues."
He also called for the U.S. manufacturing sector to prepare itself to be able to attract investment that's going to leave a slowing-down China.
"I think the investment dollar that always just lands in China is going to be looking for an alternative. This country would be absolutely nuts if we didn't position ourselves to be that alternative. It's not going to happen overnight, but we can start taking the steps to manufacture here."
It's interesting to see readers' response to the article. As of this moment, the article on WSJ's U.S. main site has only six comments, including five with Chinese surnames. The same article on WSJ's bilingual China site so far has 24 comments, many praising Huntsman's deep understanding of the U.S.-China relationship but also pointing out that that his position on China issues will fail to earn him popularity among U.S. voters.
On the other hand, Huntsman has called China's young generation on the Internet "allies and constituencies within China." In a debate with Mitt Romney earlier this month, Huntsman said:
"There are 500 million internet users in China. And 80 million bloggers. And they are bringing about change, the likes of which is gonna take China down. While we have an opportunity to go up and win back our economic manufacturing muscles. That's all I wanna do as president."
A few of WSJ readers referred to this passage of speech in their comments, warning about his goal to "take China down."
When a U.S presidential candidate receives such response from the Chinese public - mostly from the online community since that's where opinions can be freely expressed, does it mean better or less chances of winning the election? Or maybe there is no correlation at all.
Since the launch of our Plastics News China eWeekly newsletter and related Web site in June 2005, I've been receiving e-mails and phone calls from readers who would like to discuss news events and industry trends with me. This blog is to provide a platform to facilitate such communication. I invite you to come here often, read about the latest happenings and discuss them with me as well as with industry friends all across the globe. I welcome your comments and opinions.