Auto Blossoms

China's auto market continues to burst with vitality, drawing strength from a booming economy and strong consumer confidence.

Exports aside, sales of domestic-made vehicles hit 1.39 million in April, up 9.8 percent from March and 40 percent from the same period last year, said the China Automotive Technology and Research Center (CATRC).

Domestic automakers produced 1.53 million vehicles in April, down 9.82 percent from March but still up 35.18 percent compared with the same period in 2009.

Despite a demanding comparison base last year, in 2010 the market will bask in the glow of growing enthusiasm of buyers, promotional offers of automakers as well as the debut of many new models at the 2010 Beijing International Automobile Exhibition held from April 23 to May 2, said Zhao Hang, Director of CATRC.

Zhao estimated that sales of domestic-made vehicles can reach 15 million this year.

No Sour Milk Market

For China's dairy industry buckling under strains of the tainted formula scandal, greener pastures lie ahead.

China's dairy makers have staged a swift return to profits. The best performer was Mengniu, which raked in a handsome profit of 1.12 billion yuan ($164 million) in 2009, followed by Yili's 648 million yuan ($94.9 million) and Bright's 122 million yuan ($17.9 million). Only Sanyuan spilled red ink—a loss of 128 million yuan ($18.74 million)—in part because of costly efforts to rework the distressed assets acquired from Sanlu, the culprit of the scandal.

The magnitude of the bounce-back was a reason to celebrate given how heavily the health scare in 2008 pinched market confidence. On top of the reputation crisis came the economic downturn that promoted consumers to tighten their wallets.

It seems the industry has all but recovered, though the profit growth in part came from market shares left by bankrupt Sanlu, said Chen Yu, a senior analyst with Beijing Orient Agribusiness Consultant Ltd.

The long-term prospect is also turning around as recovery-boosted income delivers a strong perk for dairy demands, he said.

But one cause for concern was a lack of raw milk as dairy farmers cut back on supplies in the wake of the Sanlu incident, said Chen.

Meanwhile, competition is heating up as foreign brands rush to cash in on China's milk market, he added.

Foreign Rating Control

While China's financial industry booms, its credit-rating industry, an integral component of the market, remains in its infancy.

Foreign agencies command more than 67 percent of credit rating market shares in China and scooped up interests in three of the four biggest Chinese agencies, posing a threat to the financial security of the country, Zhu Guangyao, Associate Minister of Finance, told Economic Information Daily.

In 2006, the Moody's Investor Service acquired a 49-percnet stake in Beijing-based China Chengxin International Credit Rating Co. Ltd. while the U.S.-controlled Hong Kong Xinhua Financial Network Ltd. obtained a 62-percent interest in Shanghai Far East Credit Rating Co. Ltd. One year later, the Fitch Rating bought a 49-percent stake in Lianhe Credit Rating Co. Ltd. and took over its management rights. Only the Dagong Global Credit Rating Co. Ltd. has rejected all foreign bids, holding on to a path of development on its own.

China learned a painful lesson from heavy reliance on foreign rating agencies. In 2003, the Standard & Poor's rated 13 Chinese banks as junk grade. This put the banks in a weak bargaining position in negotiations as they looked to introduce foreign strategic investors.

Zheng Xinli, Vice Executive Director of the China Center for International Economic Exchanges, also said that there is growing need to foster domestic rating agencies and have a greater say in global financial businesses.