BizChina

Amid the global brawl over Beijing's exchange-rate policy, the European Union is leading a push against China on another front: public contracts.

China restricts bidders on most public contracts to companies whose trademark and technology are registered in China, a category that includes many foreign companies, but one that can also be used as a tool to keep them out.

That is why a key pillar of the EU's new 2020 trade strategy, to be presented to key EU officials Wednesday, is a demand for a fair deal for EU firms on so-called public procurement.

China's domestic auto market could reach sales of more than 17 million vehicles this year and 19 million next year, said a senior General Motors Co. executive, outpacing home-market sales for several Western auto brands.

Daimler AG Chief Executive Dieter Zetsche on Friday separately said he expects Chinese consumers to become the biggest buyers of Mercedes Benz cars in the next three to five years. Volkswagen AG's Audi unit expects its sales in China to surpass German sales next year.

With China's booming economy raising personal income, the country's auto market will likely continue to offer a "tremendous upside potential," said Kevin Wale, GM's head of operations in China. He predicted China is likely to hold on to its newly acquired status as the world's largest auto market for the foreseeable future.

The sales forecasts that Mr. Wale offered Thursday in Shanghai are up sharply from the 13.7 million vehicles that auto makers sold in China last year as the country's auto market grew about 50% to surpass the U.S. as the world's biggest.

Baidu, the Chinese Web search provider, posted strong earnings in its latest quarter, doubling net income in only 12 months as it continued to add online marketing customers.

Baidu, the leading search engine in the Chinese language, increased revenues by 76.4% from a year ago to $337.2 million. Essentially all of the increase comes from an extended online marketing customer base, which grew to 272,000, up 25.9% from Q3 2009, and 7.1% on a sequential basis.

After years of having to going through an awkward offshore detour to invest in Chinese startups, now venture capitalists are going direct.

They’re transforming companies they previously invested with the traditional system — so-called wholly owned foreign enterprises typically set up in the Cayman Islands — to a joint venture in China. It’s done through a share swap. I first heard about this at a recent Silicon Dragon event in the Valley.

At the event, legendary investor Dick Kramlich of venture firm New Enterprise Associates showed he’s in the vanguard. His firm is transitioning a Hangzhou-based portfolio company, microfinance service UPG, from a wholly-owned foreign entity to a Chinese firm.
This step will let NEA invest in the company directly. Then, when it comes time to exit the company through an initial public offering, NEA and the investment bankers can take UPG public on a local exchange in China.