What They Are Saying?
China Daily      2003-03-01
No special favours for auto industry China's enterprises should take advantage of their fellow countrymen's sympathy to seek favour in face of increasing international competition, urged an article in China Youth Daily. Excerpts follow:

It is reported that auto-maker Toyota is suing the Geely Group in East China's Zhejiang Province over an alleged infringement of its trademark. Toyota said the logo of the Geely Merrie car is too similar to Toyota's, which could mislead consumers. The case will soon go before a court in Beijing.

It is the first trademark infringement case a domestic automaker is involved as a civil and commercial lawsuit. If the Geely Group has infringed Toyota's trademark rights, it should accept due punishment. If not, the Geely Group could require Toyota to pay compensation. The two parties could even seek an amicable settlement.

But Geely regards this case as an attempt by foreign rivals to curb the domestic auto industry. "Due to the global economic depression, China's market becomes more important to international auto enterprises. Some believe that obstructing the development of China's auto industry will help increase their market share. And it is not strange for Toyota to want to do this."

Upon its entry into the World Trade Organization (WTO), China made a commitment to fully open its auto industry within five years. This sector has long been under government protection. Now, it is inevitable that domestic auto enterprises will face competition from overseas enterprises and possibly suffer as a result.

The logic behind the opening-up is to stimulate China's auto industry, allowing it to compete with foreign firms. The experiences of the Republic of Korea and Brazil show how effective such opening-up can be.

Geely is trying to win sympathy from the public and support from the government. But opening-up is the strongest support that can be given to the Geely Group and the whole domestic auto industry. With the rules of the game established and perfected, players should abide by them. Although foreign enterprises take advantage of technology and capital, domestic enterprises have other priorities.

So coping with international competition, China's enterprises should take a rational attitude and should not expect special support from the government.

Futures market helps

distribution reform

The futures market could have a special significance in promoting the reform of the country's distribution of major agricultural products, pointed out an article in the People's Daily. Excerpts follow:

The futures market in Dalian, capital of Liaoning Province in Northeast China, recently released a draft regulation governing the trade of corn futures, which is a clear signal for the introduction of the first new product to the market in five years.

Listing corn on the futures market will provide a good opportunity for both the development of the futures market and further reform of the distribution network of major agricultural products.

China's futures market has picked up in recent years. The overall trading volume in the domestic futures market amounted to 3.95 trillion yuan (US$475.9 billion) in 2002, 30.9 per cent higher than 2001. The trading volume in January 2003 has also achieved a 122 per cent year-on-year growth.

Evolving for some 150 years, the futures market has been widely accepted for its role in hedging risks and setting prices, especially in the trade of agricultural products, like soybean, corn, wheat and cotton.

The futures market could provide effective protection against drastic price fluctuations on the spot market.

China's soybean and wheat growers have already benefited from such practices in recent years. By utilizing the futures market, they could maintain the stability of their production costs and profits.

Once properly used, such an operation on the futures market could also reduce the risks to the government and agencies in charge of grain procurement.

On the futures market, the huge amount of buyers and sellers and the big pool of commercial information can set the prices at a reasonable level, clearly reflecting market sentiment.

The prices of futures contracts could act as authentic and accurate guidelines for agricultural production and management. It could also serve as a reliable reference for the government in policy-making.

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