XINHUA

Numbers of the Week

27.1 billion yuan

The top five domestic oil producers and refineries earned 27.1 billion yuan ($4 billion) in the first four months of this year, surging 44.8 percent from a year earlier.

6.5 billion yuan

A total of 6.5 billion yuan ($951 million) in the central budget in 2008 and 2009 will be appropriated for south-to-north water diversion projects.

TO THE POINT: Lenovo Group, one of the world's largest computer producers, reported the biggest loss in its history, up to $226 million. But its executives claimed the PC maker is shifting into high gear and hopes for a domestic IPO in the near future. Coincidentally, the mainland securities watchdog decided to reopen the IPO gate for companies after an eight-month hiatus due to the global credit crunch. Hainan Airlines successfully secured a 3-billion-yuan ($439 million) cash injection to boost its capital. PetroChina planned to acquire nearly half of Singapore Petroleum to increase its share in the Southeast Asian market. The first Internet unfair competition lawsuit was filed in May by kaixin001.com, and still awaits a court ruling.

By LIU YUNYUN

Lenovo's Wakeup Call

Lenovo Group, the biggest personal computer (PC) maker in China, suffered its first and biggest loss in 10 years.

In late May, the Hong Kong-listed PC maker published its 2008-09 annual report, showing a $226-million loss in the last fiscal year (from April 2008 to March 2009), the first time the company found itself in the red.

The fallout from the global financial meltdown took a toll on the PC giant. Even the return of Lenovo's legendary founding father Liu Chuanzhi failed to save the company. He re-took office as chairman of Lenovo in February this year after the company reported its worst quarterly performance since acquiring IBM's PC business in 2005.

Lenovo CEO Yang Yuanqing admitted the company failed to recognize the surging demand for low-priced PCs, while its international strategy focused on high-end PCs like the IBM ThinkPad has not paid off.

In spite of the huge losses the company incurred in Europe, America, the Middle East and other parts of Asia, Lenovo secured $354 million in profit from the Chinese market.

Lenovo is undergoing a massive makeover. It has cut senior executive pay between 30 and 50 percent, laid off 2,500 employees and moved its call centers from Canada to North Carolina in the United States.

Yang said the company would focus on tapping the vast domestic market this year to provide consumers with cost-efficient PCs, and work in line with the government stimulus plans.

Mainland IPO Reopened

China will allow new initial public offerings (IPO) on the mainland stock markets in June, after eight months of suspension due to the global credit crunch.

The China Securities Regulatory Commission (CSRC) issued a draft of new IPO rules for public opinion on May 24, signaling new listings are on the horizon.

A total of 32 companies have won permission to float 14.3 billion shares on the mainland markets, but still await the sound of the starting pistol. About 300 companies have filed IPO applications to the CSRC.

The recent mainland stock market rally triggered the possibility of reopening IPOs. The benchmark Shanghai Composite Index has soared nearly 40 percent since the beginning of the year. The country's massive 4-trillion-yuan ($586 billion) stimulus package also shored up investors' confidence in the mainland markets and in listed companies' performance.

The CSRC halted IPO on the mainland stock markets last September as a possible global financial bust loomed over the country. Hot money outflow, the bursting stock market bubble and deteriorating performances by listed companies dampened stock investment as investors chose to take their money out and save it in the banks.

Fueling Domestic Airlines

Domestic airlines are courting government cash injections to help them weather the global financial storm.

Most recently, Hainan Airlines Co. Ltd., the fourth largest carrier on the mainland, received a 3-billion-yuan ($439 million) cash injection from the Hainan Provincial Government and its parent company HNA Group.

The airline said that the proceeds will be used to pay back bank loans and the remainder will be used to boost its working capital.

The mainland-listed airline lost 1.4 billion yuan ($208 million) last year due to high oil prices in the first half and the waning number of travelers in the second half, according to the airline's annual report.

It previously planned to buy 50 jets from Brazilian plane producer Embraer SA, but has since halved its orders due to declining demand.

In spite of its loss in 2008, Hainan Airlines was engaged in expansion efforts. The airline and HNA Group, together with the Tianjin Municipal Government, jointly funded the establishment of Tianjin Airlines, which will take off in June this year.

Analysts took a wait-and-see attitude to the aggressive expansion in the midst of financial turmoil.

Ambitious PetroChina

The largest oil producer in China will acquire a 45.5-percent stake in Singapore Petroleum Co. for $1.02 billion.

PetroChina Co. Ltd. announced it was awaiting Chinese Government approval for the stake purchase.

According to Singaporean takeover laws and regulations, the 45.5-percent stake will trigger a general offer for Singapore Petroleum's entire business assets, meaning PetroChina will have to take over the rest of the Singaporean company.

"PetroChina is more interested in the location of the Singaporean company than the resources the latter can bring," said Chen Mingjian, CEO of Hollyhigh International Capital, a leading mergers and acquisitions consulting firm in China.

He explained Singapore is a world-class port at the gateway to the Malacca Strait. By acquiring the port city's oil company, PetroChina will be able to extend its business into Southeast Asian nations.

Chen praised PetroChina's two recent overseas acquisitions, one in Kazakhstan and the other in Singapore, both countries close to China. "Companies should be regionalized before they are internationalized, as they are better acquainted with neighboring countries' culture and laws," Chen said. "Therefore, they can go further in the international market thanks to the solid steps they take."

The Unhappy Kaixin001

The popular online social networking company kaixin001.com (kaixin means "happy" in Chinese) filed a lawsuit against kaixin.com operators for unfair competition, requesting a public apology and 10 million yuan ($1.46 million) in compensation. It was the first unfair competition lawsuit between two online companies.

Kaixin001.com was launched in March last year and quickly gained popularity among white-collar employees, many of whom became addicted to its virtual games such as "war for parking" and "friends for sale."

Kaixin001.com claimed it couldn't afford to buy the kaixin.com domain name when it first began operations, and had to add "001" after "kaixin" to avoid dispute.

By April this year, kaixin001.com had over 20 million registered users and its advertisement revenue boomed.

On seeing the success of kaixin001.com, kaixin.com was put into operation later last year, causing Internet users to mistake it for the original.

Kaixin001.com said it had poured so much money into public relations to make the network appealing to users, while kaixin.com has signed up users in large numbers without any effort.

Many netizens were unsympathetic, saying kaixin001.com and other domestic social networking companies merely copied American sites like Facebook, and urging domestic companies to be more creative.